SL Green Realty, Manhattan’s largest office landlord, has about doubled its leasing volume in that property type this year from 2023 after a string of deals, a sign of some improving demand in New York after the pandemic led to record-high vacancies.
For one, management consulting firm Alvarez & Marsal inked one of the year's largest leases with its planned relocation to an SL Green tower a block south of Grand Central Terminal. SL Green’s year-to-date office leases have totaled about 3.5 million square feet, while it has deals under negotiation of more than 900,000 square feet, the real estate investment trust said Monday in a statement.
In October, the REIT said it expected a total of more than 3.3 million square feet in Manhattan office deals by the end of this year with another 1.1 million square feet in the “leasing pipeline.” The current volume has about doubled SL Green’s 2023 Manhattan office leasing of roughly 1.78 million square feet.
SL Green is set to “mark a break from the pandemic era” and switch to "offense, capitalizing on accelerating leasing trends and investment opportunities,” Piper Sandler analyst Alexander Goldfarb said in a recent note.
Heading into 2025, SL Green also is greeted with “striking differences” that didn't exist before, including “broad acceptance that office is coming back,” he said.
Among the deals that pushed SL Green’s 2024 volume to top its October projection was Alvarez & Marsal's agreement on a new 15-year, 220,221-square-foot lease at 100 Park Ave., SL Green said in a separate statement.
Increasing occupancy
The deal brings the building’s leased occupancy to 95.8%. Alvarez & Marsal is currently located at 600 Madison Ave. with a footprint spanning about 126,000 square feet, CoStar data shows.
The 36-story, 834,000-square-foot 100 Park office tower in midtown Manhattan has a newly renovated amenity center on the second floor featuring perks including a golf simulator, game room and personal training studio, SL Green said.
SL Green also said it extended the final maturity date of an existing $360 million mortgage loan on the property while agreeing to buy its partner PGIM’s 49.9% interest.
Separately, SL Green said Travelers Insurance signed a 122,788 square-foot renewal at 485 Lexington Ave. for an additional 10 years.
The asking rent at 100 Park was $70 per square foot while the renewal lease at 485 Lexington was $68 per square foot, an SL Green spokesperson told CoStar News, adding that Travelers has been at its current location for 15 years.
The leases came as the Park Avenue market near where the buildings sit has proved its staying power as a corporate-headquarters heavy corridor. It has lower vacancies than many other Manhattan office clusters, industry professionals have said. As demand fills up for coveted spaces north of Grand Central, leasing demand is radiating out to offices near the transportation hub.
While Manhattan’s office leasing has shown improving signs, the average office visit rate, led by activity at top-tier properties, also has trended in a positive direction, a recent study from the Real Estate Board of New York trade group found.
For the record
Alvarez & Marsal was represented by David Dusek of Cushman & Wakefield, while SL Green was represented by Harry Blair, Tara Stacom, Barry Zeller, Justin Royce and Pierce Hance of Cushman & Wakefield.
In the financing deal for 100 Park, SL Green was advised by Adam Spies and Doug Harmon of Newmark, and the lenders were advised by Doug Middleton of CBRE.
Travelers Insurance was represented by Robert Ageloff, Matt Astrachan and Kate Roush of JLL, and the landlord was represented by Paul Glickman, Alex Chudnoff, Diana Biasotti, Christine Colley and Kristen Morgan of JLL.