Blackstone and Citadel are on the hunt for new locations. Boston’s Wellington Management, a $1.3 trillion asset manager, last month signed a letter of intent for its first New York office. Verition Fund Management recently relocated on Park Avenue in a massive expansion, while Sculptor Capital Management is scoping out space. At a time when New York towers are struggling with high vacancies and many workers are still remote, money managers are seeking to accommodate growing staff and encourage in-person collaboration with trendier digs. Along with tech companies, they’re helping to fill part of the void left from employers giving up space—even as Manhattan’s office supply continues to grow faster than demand. It’s a contrast to the moves by big banks, long a dominant part of the city’s office market.
In the past two years, private equity firms, hedge funds and asset managers accounted for 35% of the square footage of new leases signed by financial-services and insurance firms. That compares with 20% for large institutional banks, which represented almost a third of new deals five years ago. Although Morgan Stanley recently leased more space, and JPMorgan Chase is building a state-of-the-art skyscraper, the broader trend for banks has been toward scaling back. HSBC Holdings is relocating its U.S. headquarters to a new tower in the Hudson Yards area, where its footprint will be less than half its current size in the city.
Some large new Manhattan office-lease signings this year seemed to bode well for the pandemic-battered commercial market. IBM at One Madison Avenue! Tiffany at 200 Fifth Avenue! HSBC at The Spiral aka 66 Hudson Blvd. — for a combined total of about 900,000 square feet at high rents in high-profile new or redesigned buildings. But there’s a shadow over the deals as well. All of them were for much less space than the companies had previously, a trend that Wharton Property Advisors president Ruth Colp-Haber views as portending a “major macroeconomic reset” looming in the office market.
Even as JP Morgan Chase’s new, supertall headquarters tower rises at 270 Park Ave., the bank chopped its Manhattan footprint by 400,000 square feet in 2021 following a 300,000 square-foot haircut in 2020. CEO Jamie Dimon has suggested that more “consolidation” is in the cards. Most landlords and brokers downplay the threat. They routinely cite positive data such as a large first-quarter increase in leasing volume over the first quarter of 2021 and a gradual reduction in sublease availability. Growth by tech firms such as Facebook and Roku give reason to be bullish.
New York-Presbyterian Hospital will open a 75,000-square-foot outpatient center for its spinal surgery facility, Och Spine Hospital, in The Spiral, fresh after getting a $50 million gift to expand the spinal center. The hospital signed a 20-year lease for space on the second floor of the 66-story tower currently under construction at 66 Hudson Boulevard, landlord Tishman Speyer announced Wednesday. Och Spine’s outpost in The Spiral, which will have a dedicated lobby entrance on West 35th Street, will have on-site radiology, procedure rooms and a physical therapy gym to offer spine evaluation, imaging and treatment for patients, according to Tishman Speyer.
The spinal center was founded in 2015 at 5141 Broadway to merge spine programs from Columbia University Irving Medical Center and Weill Cornell Medicine, according to NewYork-Presbyterian. The Jane and Daniel Och Family Foundation gave the spinal surgery hospital $25 million in 2017, and NewYork-Presbyterian announced Wednesday the foundation donated another $50 million to establish more Och Spine facilities around the city, including the one at the Spiral. Och Spine’s lease comes a week after HSBC Bank inked a deal to relocate its U.S. headquarters to 265,000 square feet at the 2.8 million-square-foot Spiral, which is slated to open in late 2022, according to Tishman Speyer. The development is currently 70 percent pre-leased.
Capstone Equities reopened the Renwick Hotel at 118 East 40th Street last month, the Commercial Observer reported. The hotel is operated by the private equity firm’s hospitality management arm, Rebel Hospitality. The reopening caps off a challenging couple of years for the property. Meadow Partners, the previous owner, defaulted on a $46 million mortgage in April 2020 as the pandemic decimated the hotel industry.
By November of that year, it appeared the hotel would be converted into a homeless shelter, although that never happened. While the hotel was shuttered in the wake of the pandemic, Capstone made its move. It purchased the defaulted note from Heitman Capital Management in January for an undisclosed price, though reportedly scored a discount. Maxim Capital Group provided a $15.5 million loan for the note purchase. Meadow played ball with the changes, agreeing to a “friendly deed-in-lieu” to hand Capstone ownership.
The firm was then able to reopen the property, a landmarked building constructed almost a century ago. Meadow signed a 99-year lease for the then-Bedford Hotel in 2014, paying $22 million in cash upfront for the 16-story property. Meadow planned to spend $15 million in a phased rehabilitation of the 135-room hotel, which represented the first hospitality deal for the company.