New York’s Department of Citywide Administrative Services has signed what CoStar data shows as the city’s largest office lease this year.

The transaction is expected to bring a 32-story building in lower Manhattan to full occupancy and is important in preventing any default on related maturing loans.

DCAS signed a 630,000-square-foot lease this week at 110 William St., between Fulton and John Streets, for the relocation of the city’s Administration for Children’s Services from 150 William St., a DCAS spokesperson told CoStar News in an email, without giving more details.

No other office lease in New York so far this year has topped 600,000 square feet, according to CoStar data. The deal is also one of the five largest transactions in the city since the pandemic upended the U.S. office market. New York’s vacancy rate has since jumped to a record high of over 13% with a record amount of available space for sublease, CoStar data shows.

The deal marks an expansion for ACS from its current footprint of about 434,000 square feet at 150 William St., according to CoStar data. The lease comes as ACS was seeking a new headquarters location that would be in the same vicinity as its current home, but one that would provide its clients and staff with upgrades. ACS’s new home will be remodeled to include a pantry and more space for family visits, a person familiar with the situation told CoStar News.

About 2,300 ACS staff will occupy 26 floors at 110 William, with the move projected for 2025, the person said.

Other major deals in the past three years in New York included that of Facebook’s 740,000-square-foot lease in August 2020 at Vornado Realty Trust’s James A. Farley Building at 390 Ninth Ave., part of Vornado’s Penn District development complex surrounding the Penn Station transit hub on the west side of Manhattan.

Global investor Blackstone Group in March 2021 renewed its nearly 645,000-square-foot lease at 345 Park Ave. near Grand Central Terminal, CoStar data shows. And in December, Rupert Murdoch’s media giants Fox Corp. and News Corp. signed separate long-term leases totaling almost 1.2 million square feet at 1211 Avenue of the Americas.

The 110 William deal stands out as one of more than two dozen direct or renewal leases in the United States over 600,000 square feet since the start of the pandemic, CoStar data shows.

While corporate giants including Amazon, Wells Fargo, Marriott and United Airlines made up the majority of those leases, only a few involved government agencies. For instance, the U.S. Securities and Exchange Commission in 2021 signed a 1.23 million-square-foot lease in Washington, D.C., according to CoStar data. Other tenants around the country included the U.S. Patent and Trademark Office, IRS Processing Facility, and Miami-Dade County government.

The century-old 110 William, spanning 928,181 square feet, has suffered several tenant losses including the New York City Housing Development Corporation, which said last year it planned to relocate to Silverstein Properties’ 120 Broadway nearby.

Citywide leasing is hurting from New York’s slow return-to-office pace, along with higher interest rates and uncertainty about the economy. Pacific Oak Capital Advisors, which owns the property along with its partner, real estate investment firm Savanna, said last year the office tower was worth $25 million less than its appraisal.

Pacific Oak said in a May regulatory filing, without identifying DCAS, that it expected to sign a lease at 110 William spanning about 640,788 square feet with a city agency, which it described as a “AA-rated high-quality credit tenant.” The lease took on added significance as Pacific Oak was in talks with a lender group on $334.4 million in combined floating-rate building debt with a total interest rate of 10.24% that was set to mature in June, the filing said.

Debt for 110 William “ is considered a unique and temporary situation” because Pacific Oak is negotiating a large lease to “stabilize the property,” the filing said.

Pacific Oak also said the lease would increase the building to full occupancy from 54% and more than double its net operating income to almost $30 million from $11 million. A related financial restructuring after the lease is signed will also involve Pacific Oak taking full control of the building with Savanna exiting its stake, the filing said.

Pacific Oak said in the filing the city agency will pay an annual rent of $44 per square foot, or about $28 million a year after the full leased area is occupied, which will increase by $4 every five years during the 20-year lease period. The agency also has the option to extend the lease terms, the filing said.

Pacific Oak and Savanna bought the property for $261.1 million in 2014, CoStar data shows. Originally opened in 1918 as a 15-story building, the property was expanded to the 32-story tower in 1959 by architect Sylvan Bien, Pacific Oak has said on its website. The building has multiple setback designs and features floor plates ranging from 5,300 square feet to 40,000 square feet.

Pacific Oak declined to comment to CoStar News.