New York City's corporate headquarters-heavy Park Avenue, hard hit during the onset of the pandemic because of its predominantly office-centric nature, has once again proved its staying power.
The overall availability rate for Park Avenue buildings dropped to 8.2% in the fourth quarter, a decline of 2.8 percentage points from a year earlier and the lowest level since 2018, Avison Young said in a study. The availability rate in the high-profile corridor reached a peak of close to 20% in the second quarter of 2021.
In contrast, even as Manhattan last year posted its best post-pandemic leasing volume, the availability rate remains far higher. For instance, Avison Young previously reported the availability rate in Manhattan last quarter dropped to 17.9%, the lowest level since 2020.
As well-resourced employers seek new or renovated properties with appealing amenities to attract talent and entice employees back to the office, Park Avenue has led the city’s leasing, with employers increasingly competing for a dwindling supply of buildings. As a result, demand is radiating out to other properties nearby, industry professionals have said.
“It’s no surprise that the Park Avenue availability rate has been decreasing, as tenants have been flocking to the Central Park, Grand Central and Midtown Core submarkets of which it spans,” Avison Young said in the report. “This is also a positive sign for the rest of the market because less availability here means tenants will have to find their space elsewhere in the city.”
The decline in the corridor’s availability rate was driven both by increased leasing and “an influx of large leases” signed, Avison Young said, pointing to Blackstone’s third-quarter signing of 696,000 square feet at 345 Park as it expands its headquarters space; MetLife’s 385,000 square feet at 200 Park in the fourth quarter of 2023; and JPMorgan Chase’s lease spanning 361,000 square feet at 277 Park in the third quarter.
In another validation for Park Avenue and the Plaza District, the largest U.S. office cluster, billionaire Ken Griffin, founder of hedge fund Citadel, is moving forward with a plan to build a 1.8 million-square-foot office tower at 350 Park with Rudin and developer Vornado Realty Trust. Citadel is already the anchor tenant at 425 Park, the first full-block office tower to open on Park Avenue in a half-century.
“There will always be Park Avenue,” even as an increasing array of occupiers in Manhattan is “tilting to the south and to the west,” Steven Roth, Vornado chairman and chief executive, said in his closely followed annual shareholders letter in April.