Some significant new Manhattan workplace-lease signings this 12 months seemed to bode well for the pandemic-battered professional market place. IBM at Just one Madison Avenue! Tiffany at 200 Fifth Avenue! HSBC at The Spiral aka 66 Hudson Blvd. — for a blended total of about 900,000 square feet at substantial rents in large-profile new or redesigned structures.
But there is a shadow about the deals as effectively. All of them were for much a lot less house than the businesses had previously, a pattern that Wharton Home Advisors president Ruth Colp-Haber sights as portending a “major macroeconomic reset” looming in the workplace marketplace.
Even as JP Morgan Chase’s new, supertall headquarters tower rises at 270 Park Ave., the lender chopped its Manhattan footprint by 400,000 sq. feet in 2021 subsequent a 300,000 square-foot haircut in 2020. CEO Jamie Dimon has advised that additional “consolidation” is in the playing cards.
Most landlords and brokers downplay the risk. They routinely cite constructive facts these types of as a massive initially-quarter improve in leasing quantity around the first quarter of 2021 and a gradual reduction in sublease availability. Development by tech firms such as Fb and Roku give motive to be bullish. New and redeveloped towers from Linked Firms, SL Green, Tishman Speyer and the Durst Organization go on to attract superior-having to pay tenants.
But given that we generally give the optimists a platform to cheerlead — and this column has some situations joined in the cheerleading — we’ll switch the mic over to a dissenting perspective this week.
“When organizations shift, notice is rightly termed to the thrilling new lease the tenant has signed and its new creating,” Colp-Haber told Realty Look at. “But we will need to continue to keep our eye on the major picture, which is to look at the whole sq. footage in advance of and following the shift.
“Given the craze toward hybrid function and 37 percent workplace attendance, the critical problem is, what is the internet effect of that go?”
For guaranteed, some significant modern moves depict major enlargement — Chubb at 550 Madison Ave., Roku to 5 Situations Square and PDT at Deutsche Lender Heart.
Even so, Colp-Haber says, “The trend is crystal clear. With business emptiness premiums now over 20 %, the secular [long-term] bear current market in rents is properly underway with the exception of trophy structures. This will continue on for various decades except if there is a extraordinary adjust in the change to remote work.
“It’s a straightforward subject of offer and desire — as well substantially office space source and not enough demand from customers.”
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