Record Number of Manhattan Office Towers with High-End Rents

In a benchmark of success that Manhattan office building owners are hoping will herald a “trickle-down” recovery, the exclusive club of office towers that charge rents in excess of $100 per SF now encompasses 80 buildings, up from last-year’s record of 77.

Manhattan office tenants signed 192 leases in 2023 with starting rents of $100 or more, amounting to 5.6M SF, equal to 26% of overall leasing in the borough last year, according to JLL’s Year-End 2023 report.

The leaderboard of office landlords who attracted the most premium rent-paying tenants was topped by Vornado Realty, which inked 14 top-dollar deals encompassing 1.2M SF; The Related Companies, with 15 deals encompassing 940K SF; and SL Green, with 21 deals encompassing 800K SF.

RFR’s landmark Seagram Building, also known as 375 Park Avenue, notched 12 leases with triple-digit rents, the largest tally for a Manhattan building in 2023.

The heavyweight crown for the highest office rent in Manhattan was snatched by newly built One Vanderbilt, which inked $247 per SF lease with AIMCO in June.

Buildings that joined the $100+ club in 2023 included 50 Ninth Avenue and 555 Greenwich Street in Midtown South; Midtown building new to the club included 330 Madison Avenue and 22 Vanderbilt.

The two largest transactions of the year in terms of dollars were leases for entire buildings, a 585K SF lease at Vornado’s 350 Park Avenue and a 432K SF deal at Related’s 20 Hudson Yards.

According to JLL, 80% of the $100+ leasing deals involved the financial services sector.

“A lot of the big banks were too conservative in estimating their space needs during the pandemic,” Andrew Lim, JLL’s New York research director, told GlobeSt.com. “As we’ve come out of the pandemic, financial services companies have done well, they’ve continue to hire and they realize they need more space.”

The growing interest in high-end space and a rapidly shrinking development pipeline in the Manhattan office sector already is creating a shortage of large blocks of available space in premium buildings with prime addresses.

JLL estimates there is now less than 7.2M SF under development, with a majority of the space in that pipeline already leased or expected to be owner-operated.

“Because of the flight to quality, new construction has been the hottest segment in the market, but soon there will be so little new supply at that end of the market, you’ll start to see a trickle-down effect,” Lim told us.

“A lot of the buildings on Park Avenue that are seeing $100 [per square foot] rents are not glitzy new Class A buildings like Hudson Yards, but they’re the next best thing,” he added. “It’s not just quality, it’s location.”