Blackstone, the world’s largest different asset administration agency, is all-in on Manhattan’s turnaround after the COVID pandemic crippled the industrial actual property market.
The agency’s effort to purchase 1345 Sixth Ave. from Fisher Brothers was extensively hailed this week as a stroke of religion within the Manhattan workplace market — however it wasn’t the primary mega-deal by the monetary big.
Final summer season, Stephen A. Schwarzman-led Blackstone additionally signed the biggest Manhattan workplace lease of 2024 at Rudin’s 345 Park Ave., the place it determined to resume and broaden from 720,000 to over 1 million sq. ft.
Each strikes mirror a change of coronary heart by Blackstone, which stated final yr it was focusing much less on workplace properties than on tech and industrial investments.
Blackstone’s pivot indicators a outstanding — and to some analysts, surprising — total resurgence within the Manhattan workplace market, which many gave up for lifeless after the pandemic.
If the not-yet-certain 1345 Sixth buy, first reported by Bloomberg, goes by, it might speed up a turnaround within the investment-sale market, which noticed $1.6 billion in complete gross sales within the fourth quarter of 2024 — up 98% over the third quarter and 110% above the fourth quarter of 2023, in accordance with Avison Younger.
The gross sales had been nonetheless nicely under 2019 totals, however the upward pattern is evident, pushed partly by diminished constructing values as a result of rising rates of interest and overhanging debt.
“There are plenty of cut price hunters on the market however they’d higher transfer quick as a result of the bargains received’t final,” stated one investment-sale dealer who didn’t need to be named.
Monetary phrases for the possible 1345 Sixth deal weren’t disclosed.
Issues are much more upbeat on the leasing entrance, the place landlords and tenants have “put work-from-home within the rear-view mirror,” a JLL report stated.
Monitoring service VTS reported this week that workplace house demand within the Huge Apple elevated in November to greater than in pre-pandemic 2019 for the primary time. The survey, which analyzes corporations’ house necessities, is considered an authoritative preview of the leasing market’s path.
CBRE world brokerage head Stephen B. Siegel instructed The Put up, “VTS is appropriate” about demand, which landlords and brokers additionally observe in rising requests for “tire-kicking” tower excursions by tenants on the hunt.
Relating to 1345 Sixth Avenue, the place he isn’t concerned, Siegel stated, “It’s a nice asset with stabilized occupancy as soon as Paul Weiss strikes in.”
The legislation agency is transferring into 765,000 sq. ft there in 2027 — the biggest lease signed in 2023. The tower lately had $120 million in capital enhancements.
The constructing is greater than 92% leased to tenants reminiscent of Intercontinental Change, Canyon Companions and Fortress Funding Group.
As reported in The Put up, vacancies in A-plus-class buildings fell to underneath 10%; total availability stabilized at between 16% and 17%; and demand for prime house has grown so tight that tenants have discovered no room wherein to maneuver or broaden.
What’s extra, as tallied by JLL, a document 28 new leases in 2024 had been signed at rents above $200 per sq. foot, and a document 212 leases inked for at the least $100 per sq. foot.
The latter class included Blackstone’s lease at 345 Park Ave.
Manhattan leasing quantity of 35.9 million sq. ft in 2024 was solely 10% p.c under 2019, Avison Younger reported on Thursday, handily whipping different giant US cities reminiscent of Los Angeles and Chicago the place leasing was 29% and 33% lower than in 2019, respectively