Weekly Market Report - June 10, 2025
- Broker Support
- Jun 13
- 8 min read
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Developer BXP is set to begin construction on a new office tower at 343 Madison Ave. without a committed anchor tenant, a move that could signal a strong demand for high-end Manhattan office buildings. The 46-story, 1 million square-foot tower is expected to cost $2 billion and is expected to fill quickly, as demand for space near the commuter hub is strong. The tower is one of the largest Manhattan office towers built speculatively since Larry Silverstein developed 7 World Trade Center in 2006. BXP's decision to move forward with the project on a spec basis is a response to the office market's ongoing troubles, including a 23% vacancy rate in Manhattan and a 4.5% vacancy rate in Park Avenue. Other developers, such as Extell Development and Rudin, are also developing office towers. BXP officials expect rents to exceed $200 per square foot and approach $300 at the top floors. If BXP backs out, construction costs would be reimbursed by the MTA, which relies on collecting rent by leasing the land.
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Vornado’s 1M sf deal at 770 Broadway accounted for 1/3 of demand
The Manhattan leasing market experienced a 7% decrease in leasing volume last month, with tenants signing deals for 3.1 million square feet of office space, the lowest monthly total since December. However, leasing volume was up 5% year-over-year, largely due to NYU's 1.1 million square foot lease at 770 Broadway, Manhattan's largest new lease since 2019. The report's author, Franklin Wallach, believes it's a healthy month of leasing, with the strongest year of leasing activity since 2001 if everything remained the same.
Leasing volume was still 16% above the 10-year monthly average, and demand exceeded supply. Availability tightened slightly, but the average asking rent was cut by 1.2% to around $73.50 per square foot. The second-largest lease deal was Fox Rothschild's 73,000-square-foot renewal and expansion at HJ Kalikow's 101 Park Avenue. Aquarian Holdings signed a 75,000-square-foot lease at the Olayan Group's 550 Madison Avenue in Midtown. Manhattan sublet supply shrank for the eighth consecutive month to about 14 million square feet, the lowest since July 2020. Wallach said it was too soon to determine if last month's drop in leasing is a sign of a larger slowdown.
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Blackstone, Greystar lead national charge: Report
A report by Bisnow reveals that private equity firms own about 10% of the US apartment units, with 121 firms owning approximately 8,200 buildings. The report highlights that private equity's involvement in the sector has worsened housing affordability issues, displaced local communities through rent hikes and aggressive evictions, and diminished tenants' quality of life. The report identifies private equity as an investment where a firm acquires an asset through a combination of equity capital raised from investors and debt, with ownership of the acquired asset being private. Blackstone is the largest private equity firm, owning over 230,000 units in the country. Greystar ranks second with 138,000 units, while Starwood Capital Group, Related, and Cortland round out the top five. More than half of the 2.2 million units are located in just five states: Texas, Florida, California, North Carolina, and Georgia. The report concludes with recommendations, including limiting rent increases to 3% annually, carrying out "just cause" evictions, and urging public officials to protect tenants and limit corporate control of housing.
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SL Green Realty Corp. is marketing two Manhattan office buildings, 110 Greene St. and 690 Madison Ave., as demand for office properties in the city increases. The landlord hired brokerage Eastdil Secured to market these properties, which are expected to fetch around $300 million. The Manhattan office market has been growing, with leasing increasing by 59% from a year earlier. Investors have also been seeking deals, with Amazon purchasing an office tower on Fifth Avenue and RXR agreeing to buy the office building at 590 Madison Ave. for nearly $1.1 billion. The 13-story property at 110 Greene St. is located between Prince and Spring streets and has tenants including Avoro Capital. SL Green took control of 690 Madison Ave. through a foreclosure in 2021 and sold a stake to Jeff Sutton last year. The Manhattan office market has been picking up, with leasing increasing by 59% from a year earlier.
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A Midtown shopping hub in foreclosure proceedings could be sold on Friday, according to a court document. The retail space at 1011 Third Ave., which was home to Dylan's Candy Bar for 20 years, has been on the market since shortly after owner Olshan Properties defaulted on its $35 million mortgage in March 2024. Bids to acquire the 36,000 square-foot shopping center at the corner East 60th Street have been rejected so far by the lender. However, attorneys for both sides said the property could be sold at a price high enough to settle the building's debt by June 6. The parties are hopeful that there will be a closing with the new proposed purchaser by that date, which could resolve the entirety of the litigation. The shopping center was developed in 1986 by Morton Olshan, one of New York's largest developers, next to a 43-story residential tower he built called the Savoy.
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Israeli billionaire Eyal Ofer's Global Holdings Group is now the primary manager of 25 Kent, the 500K SF, eight-story office building in Brooklyn. The company made a $100M preferred equity investment in the project in 2018 and signed Queen One, a tech and commerce company, to a 10-year lease for 30K SF at the building. The building was just 54% leased a year ago, more than five years after it completed construction. Other tenants in the building include events company La Sirena, Amazon Music, bathhouse Othership, and AI company Altana. Global Holdings is still involved with the building despite the management switch-up. Part of the company's management plan is to introduce prebuilt office spaces ranging from 3K SF to 11K SF to attract new tenants. The spaces are expected to be delivered by September. Global Holdings was represented in-house in the deal by Panzirer and Alex Radmin, and the building's lease was supported by a $6M performance-based tax credit as part of an Empire State Development program designed to create job commitments.
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Manhattan's largest office landlord, SL Green, has been involved in a high-profile battle over CEO pay, with the firm Institutional Shareholder Services (ISS) recommending that investors vote at annual stockholder meetings on executive pay and other boardroom matters. ISS has previously voted against pay packages awarded to CEO Marc Holliday, but this year's battle escalated by calling Holliday's 2024 compensation of $21 million evidence of an "unmitigated pay-for-performance misalignment" and urging investors to unseat two top board members for showing "poor responsiveness" to its concerns.
SL Green strongly disagreed, and 69% of shareholders voted in favor of Holliday's 2024 pay, and both directors targeted by ISS were re-elected with at least 75% of the vote. The feud between SL Green and ISS is the highest profile fight this year between C-suite leaders and proxy advisers, who have significant sway over important corporate decisions. Critics argue that leading proxy advisers are unaccountable and their practice of advising companies on how to score better poses an unmanageable conflict of interest. SL Green, however, has stated that a supermajority of shareholders voted to support executive compensation, an increase from the prior year, in recognition of the company's impressive operating results and total return to shareholders of 58.2%.
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AlphaSense, an AI company, has chosen a Hudson Yards office tower, 441 Ninth Ave., as its new global headquarters. The company will occupy 50,000 square feet on a 10-year deal, subleasing the space from Peloton, a major tenant in the building. AlphaSense's Chief People Officer John Reid-Dodick said the move represents a long-term investment in its people, culture, and presence in New York City. The company will move from its current office at 24 Union Square East, which has 40,000 square feet across three floors.
The new office will accommodate 300 seats, a 50% increase from the Union Square location. The Union Square building is owned by S. Klein Family LLC and is 83.8% leased, with estimated office rents of $44 to $54 per square foot. CommonWealth Partners, a Los Angeles-based firm, acquired 441 Ninth Ave. from Cove Property Group and the Baupost Group for around $1 billion, boosting the office sector amid the pandemic. Lyft is a major tenant in the building. AlphaSense has a client base of over 6,000 customers and recently acquired research provider Tegus for $930 million.
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The owners of Independence Plaza in Tribeca have reopened plans to develop a 1 million-square-foot tower, adding about 900 apartments to the 1,300-unit complex. However, the project was sent back to the drawing board last year after Stellar Management and Vornado Realty Trust examined opportunities created by zoning changes under the mayor's City of Yes plan. The cost of waiting is rising in tandem with interest rates, while the value of Independence Plaza is falling.
The waiting cost is expected to rise by at least $15 million later this year, as the $675 million mortgage for Independence Plaza is refinanced. The new mortgage will carry a shorter term and a higher interest rate than the maturing loan's 4.25%. Independence Plaza is a riskier property than before, as 40% of its apartments have regulated rents. The project is on hold due to "significant changes" to city and state housing policy. Community board members are skeptical of the developers' plans, suggesting they pay for a library or hospital instead.
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Their legacy businesses and high-end ventures aren't just vanity plays
Marc Rowan, a New York City real estate billionaire, has opened Duryea's Sunset Cottages in Montauk for $2,900 a night during peak season. The cottages offer guests a private hot tub, lobster cobb salads, and decks with bluffs. Rowan's East End real estate portfolio includes motels, restaurants, and commercial properties. The wealthy real estate investors from Manhattan are creating a summer they want to enjoy by establishing a presence with high-end hospitality and retail ventures. Real estate players in the Hamptons are increasingly investing in legacy properties, such as Duryea Sr.'s local fish business and Gurney's Inn.
These investments are seen as part of their investment portfolio, as commercial property values exploded during Covid as the community shifted from a seasonal to year-round community. Retail plays are also gaining traction, with Zucker Organization buying storefronts in Sag Harbor and Tahari Realty selling five East Hampton retail properties. Passion projects, such as renovating a rundown movie theater and reinventing a Sagaponack General Store, are also gaining traction. These investments are not just about financial gains but also contribute to the local economy and the overall quality of life in the area.
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Bryant Park management has filed a countersuit in New York state court to evict the Bryant Park Grill, which continues to operate a month after its lease expired. Park officials accused the restaurant of defying the terms of its lease, which ended April 30 after the nonprofit park operator refused to renew it. The park's attorney, Bradley Silverbush, described the restaurant as an "unscrupulous and disgruntled former tenant" who wrongfully refused to vacate simply because they wanted to make as much money as they could. Park officials have selected Jean-Georges Vongerichten's enterprise to replace the 1,000-seat, 25,000 square-foot Bryant Park Grill after 30 years of business. The grill's owner, Ark Restaurants Corp., has accused park officials of running a "sham" process to replace the restaurant, which generated $31 million in revenue last year. The park intends to remain open until its case against the park is resolved in court.
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