Blackstone, the world’s largest various 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 broadly hailed this week as a stroke of religion within the Manhattan workplace market — nevertheless it wasn’t the primary mega-deal by the monetary big.
Final summer time, Stephen A. Schwarzman-led Blackstone additionally signed the most important Manhattan workplace lease of 2024 at Rudin’s 345 Park Ave., the place it determined to resume and develop 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 alerts a outstanding — and to some analysts, sudden — general resurgence within the Manhattan workplace market, which many gave up for useless after the pandemic.
If the not-yet-certain 1345 Sixth buy, first reported by Bloomberg, goes by means of, it will speed up a turnaround within the investment-sale market, which noticed $1.6 billion in whole gross sales within the fourth quarter of 2024 — up 98% over the third quarter and 110% above the fourth quarter of 2023, in keeping with Avison Younger.
The gross sales had been nonetheless effectively beneath 2019 totals, however the upward development is obvious, pushed partially by decreased constructing values as a result of rising rates of interest and overhanging debt.
“There are a lot of bargain hunters out there but they’d better move fast because the bargains won’t last,” stated one investment-sale dealer who didn’t need to be named.
Monetary phrases for the potential 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 in the rear-view mirror,” a JLL report stated.
Monitoring service VTS reported this week that workplace house demand within the Massive 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 route.
CBRE international brokerage head Stephen B. Siegel advised The Put up, “VTS is correct” about demand, which landlords and brokers additionally observe in growing 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 is a great asset with stabilized occupancy once Paul Weiss moves in.”
The regulation agency is transferring into 765,000 sq. ft there in 2027 — the most important lease signed in 2023. The tower not too long ago had $120 million in capital enhancements.
The constructing is greater than 92% leased to tenants resembling Intercontinental Change, Canyon Companions and Fortress Funding Group.
As reported in The Put up, vacancies in A-plus-class buildings fell to underneath 10%; general availability stabilized at between 16% and 17%; and demand for prime house has grown so tight that tenants have discovered no room by which to maneuver or develop.
What’s extra, as tallied by JLL, a report 28 new leases in 2024 had been signed at rents above $200 per sq. foot, and a report 212 leases inked for at the very 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 beneath 2019, Avison Younger reported on Thursday, handily whipping different giant US cities resembling Los Angeles and Chicago the place leasing was 29% and 33% lower than in 2019, respectively
