Weekly Market Report - December 2, 2025
- Broker Support
- Dec 5, 2025
- 10 min read
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Under CEO Jamie Dimon, the bank is working on a huge new tower in Canary Wharf, Britain’s dockland-turned-financial center
JPMorgan Chase, led by Jamie Dimon, is set to build London's largest office block in Canary Wharf, due for completion in the 2030s. The new 3-million-square-foot tower will accommodate 12,000 employees, representing half of the bank’s workforce in the UK, its largest European market. Dimon’s decision follows speculation about the bank’s future plans, as its current Canary Wharf tower is aging. JPMorgan considered refurbishing its existing office, constructing on a different site within Canary Wharf, or moving to the historic City of London financial district.
Ultimately, logistical advantages in Canary Wharf influenced the decision, especially speed and cost. The new building, designed by architect Norman Foster, aligns with JPMorgan’s strategy to strengthen its position as a leading global financial institution. The timing of the announcement also coincides with supportive remarks from UK officials, reinforcing the bank's relationship with the government amid ongoing economic growth initiatives. This development is an encouraging sign for Canary Wharf, which has faced challenges in the commercial real estate market recently.
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A tour of Manhattan buildings you can now call home, and a peek inside the architectural hacks that make transformations possible
In the past 20 years, New York developers have transformed nearly 30 million square feet of office space into residential units, increasing the conversion rate recently. Historically, the complexity of converting wide office buildings posed challenges, but innovative architectural solutions, like cut-through notches and light wells, have emerged. The first conversion boom occurred after the 1990s recession, supported by falling office prices and tax incentives, resulting in around 100 buildings converted from 1995 to 2006. From 2005 to 2019, another 125 conversions added considerable square footage downtown.
Post-pandemic, with vacancy rates exceeding 20%, conversions surged again, influenced by new tax abatements and expanded zoning laws. Midtown particularly saw announcements of half of all conversions, including notable buildings like the former Pfizer headquarters. At 750 Third Avenue, extensive renovations are underway, including the demolition of parts of the building to create light-infused apartments while meeting city codes. With 680 units planned for completion by 2029, this substantial project exemplifies a trend toward larger office-to-residential conversions, as the national pipeline shows growth from 23,000 to 78,500 units. Successful case studies are encouraging further adaptations nationally.
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A recent Commercial Observer confab also discussed ongoing and new challenges
At the Commercial Observer’s Fall State of Office Forum on November 20, Glen Weiss of Vornado Realty Trust declared, “New York is back,” reflecting a positive sentiment among panelists regarding the office leasing market. Unlike previous years of uncertainty due to COVID and work-from-home trends, speakers highlighted low vacancy rates and rising rents in prime Manhattan office spaces. David Levinson of L&L Holding noted the increasing demand, with tenants looking to expand. A panel discussion revealed that the office market recovery is now fundamentals-led, reversing past trends.
Silverman from Eastdil Secured reported significant office financing activity, with diverse international buyers showing interest. Competition with tech markets has improved New York's appeal to tech tenants, as noted by Related’s Philippe Visser. Although concerns linger about potential political challenges and AI's impact, the atmosphere remained optimistic. Discussions underscored the importance of hospitality and personalized tenant experiences in fostering a thriving office environment, blending work and leisure seamlessly in New York City.
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Commercial real estate is struggling. Investors, burned by falling values and attracted to high returns elsewhere—like Nvidia's 70%—are hesitant. Although property looks relatively priced compared to other assets, institutional buyers, traditionally key players, have reduced real estate allocations amid disappointing returns. In 2025, large investors were net purchasers of U.S. property for the first time in three years, but overall deal activity remains weak. Current property values are down, with offices and apartments at significant discounts. The need for renovation in aging properties adds to investor reluctance. Amid rising debt costs and inflation, the traditional real estate investment strategy has faltered, emphasizing the importance of rental income. As supply tightens, especially in retail, landlords may find opportunities for rent increases, making undervalued properties appealing if tech rally slows.
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EQT Partners, a Sweden-based private equity firm, has significantly expanded its presence in Midtown by leasing an additional 38,358 square feet on the entire 32nd floor of 245 Park Avenue, as announced by landlord SL Green Realty. The asking rent for this expansion was $190 per square foot, bringing EQT’s total occupancy in the 44-story building to 114,562 square feet across the 32nd to 34th floors. EQT first occupied the building in December 2024. Steven Durels of SL Green expressed satisfaction with the expansion, highlighting the robust leasing activity in the Midtown area, especially in the Park Avenue and Grand Central corridors. The specifics of the lease duration remain unspecified. SL Green. SL Green is currently redeveloping the property to include a new lobby, amenities like a wellness center, a golf lounge, and a rooftop garden, enhancing the space for existing tenants including Ares Management and Tradeweb Markets.
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Developer pursuing 411-unit conversion in Midtown East
Rudin is advancing its plans for the conversion of 845 Third Avenue in Midtown East with a $350 million recapitalization, bolstered by a $250 million construction loan from BDT & MSD Partners and an $80 million equity investment from Quantum Pacific, which now holds a 75% stake. Newmark’s Jordan Roeschlaub and Nick Scribani facilitated the loan negotiations. The recapitalization exceeds the $222 million initially sought by Rudin. Plans filed in September outline the transformation of the 21-story building into a 411-unit apartment complex, complemented by 9,100 square feet of retail space and numerous residential amenities including a party room, gym, spa, sauna, plunge pool, media rooms, and coworking spaces.
The budget for the conversion is approximately $41.7 million, incorporating the 467m tax abatement program to designate 25% of the units as affordable housing. Construction is slated to begin in the first quarter of 2024 after relocating current office tenants, with completion anticipated by the third quarter of 2027. The conversion project, initially delayed due to financial feasibility, gained momentum following a City of Yes rezoning that allowed additional floors. The property, built in 1963, had over 100,000 square feet of vacant space with no leases signed for nearly 24 months prior.
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Brookfield trophy towers landed month’s largest loans
In October, lenders invested nearly $4 billion in Manhattan office towers, focusing on trophy assets with strong tenancy and recent renovations. The largest deals included Brookfield Properties’ 5 Manhattan West, which secured a $1.25 billion CMBS loan, and 660 Fifth Avenue, which received $1.21 billion in financing. At 5 Manhattan West, the 1.7 million-square-foot tower features major renovations and tenants like Amazon and JPMorgan Chase. The financing matures in five years at a fixed 6 percent interest rate. For 660 Fifth Avenue, the loan will address previous debts related to its redevelopment, with lenders partitioning an additional mezzanine loan into the deal.
Also, a $900 million CMBS loan was provided for Fosun International's 28 Liberty, achieving 93 percent occupancy after a significant lease expansion by Stripe. Two further deals included a $507 million CMBS loan for 11 Times Square, largely occupied by Proskauer Rose and Microsoft, and a $372 million loan for Norges Bank Investment Management's acquisition of 1177 Sixth Avenue from Silverstein Properties, facilitating 95 percent ownership for Norges. Overall, October's financing reflects strong confidence in Manhattan's prime office properties.
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AM Management, Eyn Holding, Axonic Capital buy 114 West 41st for $133M
Clarion Partners sold the office building at 114 West 41st Street for $133 million, significantly less than the $282 million acquisition price paid in 2018. The buyer trio consists of AM Management, Eyn Holding, and Axonic Capital. The transaction, which closed recently, equates to $380 per square foot, reflecting a 53 percent discount. The building, once favored by TAMI tenants like Roku and VTS, remains under a $141 million loan from MetLife, which will continue with the new owners. Despite its renovation in 2015 and the ongoing conversion trends in Manhattan, there are no residential plans for the property. Additionally, Clarion faces potential foreclosure at 209-211 East 43rd Street, linked to a lawsuit over a $57 million loan default. Meanwhile, Salesforce has expanded by 71,000 square feet at 3 Bryant Park, located nearby.
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Demand for Manhattan office space is rising, but shareholders are struggling with significant stock price declines. SL Green, the largest office owner, and the Empire State Building's owner have both seen a 35% drop this year, while Vornado Realty Trust's stock has decreased by 20%. Despite the overall real estate sector's 4% increase and the S&P 500's 14% rise, office leasing in New York is on track to surpass 2019 levels, with new buildings expected to command up to $300 per square foot in rent. Analysts suggest that heavy investments in amenities and advanced elevators are raising operational costs, delaying returns for shareholders and diverting institutional investment elsewhere.
JPMorgan analyst Tony Paolone highlighted Vornado's $1 billion investment in redeveloping two towers near Penn Station. Tenants have been attracted to these upgrades, agreeing to pay up to 40% more in rent, though they receive one year of free rent, which impacts cash flow. Paolone upgraded Vornado's stock to "neutral" due to future potential but advised against purchasing it. Vornado's President stressed that full benefits will materialize by 2027, as tenant activity in refurbished spaces shows promise, indicating positive engagement despite current financial strains.
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The UN Population Fund is relocating to a smaller office at 730 Third Ave., reducing its space from 130,000 square feet at 605 Third Ave. to about 65,000 square feet. This move aligns with the UN's broader strategy of downsizing its New York presence, which sees fewer staff commuting due to flexible work-from-home policies and some staff relocated to Nairobi, Kenya. Fitch Ratings reported that the departure will lower 605 Third’s occupancy rate to 83%, prompting monitoring of its $400 million debt.
The building, appraised at $685 million in 2021, is co-owned by Fisher Brothers and JPMorgan Asset Management. Overall, the UN's Manhattan office space has halved compared to a decade ago, as the organization plans to reduce its workforce by over 1,100. The new office at 730 Third boasts renovations by asset-manager TIAA, incorporating modern amenities like a double-level lobby, gym, and outdoor space. The UN Population Fund previously rented its space at 605 for $42 per square foot, but the new rental rate has not been disclosed.
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Artificial intelligence is poised to impact the job market, particularly in high-value sectors, according to Empire State Realty Trust CEO Tony Malkin. While consulting firms have long warned of AI-induced job losses, Malkin suggests that the office market in New York City will remain resilient, with strong leasing activity continuing through 2023. As Malkin stated at Bisnow’s annual NYC State of the Market event, jobs are likely to be lost by those who fail to adopt AI rather than by those whose roles involve high-value tasks. Predictions indicate significant job reductions due to AI, with estimates from McKinsey and Goldman Sachs forecasting 300 to 375 million positions potentially affected.
Companies like Duolingo and Klarna have already begun making workforce cuts to incorporate AI into their operations. In this evolving landscape, Malkin emphasizes that employers will favor candidates familiar with AI technologies, enhancing productivity. He maintains that while AI will alter hiring practices, it will not negatively impact office leasing, focusing instead on the potential for AI to boost productivity rather than merely eliminate jobs. ESRT continues to maintain a strong portfolio of Class-A office space in New York.
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New York City's commercial real estate sector shows optimism as Manhattan office leasing volumes are set to surpass prepandemic levels, with a 21% increase in Q3. Key players like Silverstein Properties and BXP anticipate a development boom fueled by financial conditions and demand for high-quality offices. Current market characteristics mirror those post-global financial crisis, according to Oxford Properties' Dean Shapiro. National office vacancy rates have dropped to 22.5%, with NYC’s at 14.8%. Class-A office spaces are leading the recovery, making up over half of the leasing volume. As demand shifts towards well-amenitized properties, landlords see increased activity, and expectations of rising prices signal a more robust upcoming market.
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RXR has secured two leases totaling 15,312 square feet at 75 Rockefeller Plaza, bringing occupancy close to 100%. The leases, with asking rents between $100 and $110 per square foot, include a significant 10-year lease for investment bank Univest Securities, which occupies 7,802 square feet on the 25th floor. Previously a subtenant, Univest sought to expand and form a direct relationship with RXR after a thorough search. The smaller lease, covering 7,510 square feet on the 26th floor, is for law firm Brownstein Hyatt Farber Schreck and spans three years. Rich Benenson, the firm’s managing partner, emphasized the importance of the location for strategic growth with RXR’s representation from a team including Bruce Mosler and Ethan Silverstein. RXR's William Elder expressed satisfaction with the leasing momentum at the building and looks forward to welcoming further tenants as market activity increases in Midtown. Other current tenants at 75 Rockefeller Plaza include Macrae, BasePoint, and Guidehouse.
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Developer Abramson Brothers plans to convert a Hell's Kitchen office property at 333 W. 52nd St. into an apartment building with over 100 units, capitalizing on the trend of transforming commercial spaces into residential housing. The 16-story building will feature 108 apartments, along with ground-floor retail space and a parking garage. This project will qualify for the 467-m tax break, which mandates that at least 25% of the apartments must be affordable for households earning no more than 80% of the area's median income, approximately $117,000 for a family of three. The company, founded in 1957, has owned the 94,000-square-foot property since at least 1975. Tenants, including antique store Olde Good Things, have expressed concern over the conversion, with Fine Art Imaging’s CFO stating her dissatisfaction with the impending move. As the city faces an office space surplus and housing shortages post-Covid, the trend of office-to-residential conversions continues, exemplified by other developments in Midtown.
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Blank Street Coffee is set to open its largest retail location at 32 Avenue of the Americas, a 27-story Art Deco building owned by Rudin. The lease for the 2,900 square foot space has been signed, although the rent details remain undisclosed; however, CoStar lists the asking rent at $125 per square foot. The opening is anticipated in the second quarter of 2026. Rudin's Robert Steinman expressed enthusiasm about Blank Street's arrival, highlighting the addition of quality coffee, matcha, and pastries as a benefit for tenants and the neighborhood. Rudin purchased 32 Avenue of the Americas, previously known as the AT&T Long Lines Building, in 1999, and it underwent a renovation in 2002. Current office tenants include Digital Realty, Dorilton Group, and Industrial Color.
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