Park Avenue’s Commercial Leasing Market Shows No Signs of Slowing Down

By: Mario Mancini

Park Avenue’s commercial leasing market shows no signs of slowing down, highlighted by a recent significant transaction. Tradeweb Markets has signed a lease for 76,000 square feet across two full floors at SL Green’s 245 Park Avenue, NY Post reported.

The firm, known for operating electronic platforms for rates, credit, equities, and money markets, will be relocating from Silverstein Properties’ 1177 Sixth Avenue. The asking rent for the space at 245 Park was a notable $145 per square foot, and the building is currently 87% leased.

245 Park Avenue, managed by SL Green, has been attracting considerable interest from tenants due to its ongoing major redevelopment. Overseen by renowned design firm KPF, the redevelopment includes a terra cotta overclad of the facade, new windows, an updated lobby, a 17,000 square-foot wellness center, and a 10,000 square-foot restaurant. These enhancements are designed to provide a modern and attractive environment for tenants, contributing to the building’s leasing success.

The leasing boom on Park Avenue is part of a broader trend in Manhattan’s commercial real estate market. Several commercial brokerages have reported strong leasing momentum in the second quarter of the year. CBRE, one of the most optimistic, cited a 35% increase in leasing activity compared to the same period in 2023. Manhattan overall saw 6.13 million square feet of leasing activity, which is 19% above the five-year monthly average of 5.15 million square feet.

Midtown Manhattan has shown a robust recovery, marking the third consecutive quarter of leasing above the five-year quarterly average, a milestone that hasn’t been achieved since 2018. Midtown South also experienced a strong quarter, with sublease availability falling to its lowest point since August 2020. These trends indicate a healthy demand for office space in these areas, driven by a combination of new leases and relocations.

However, not all parts of Manhattan are experiencing the same level of success. Downtown Manhattan continues to struggle, with only 589,000 square feet of deals reported in the latest quarter. This figure is well below the five-year average and represents a decline from the same period last year. The disparity highlights the uneven recovery within Manhattan’s commercial real estate market.

In another notable transaction, law firm Covington & Burling signed the largest single lease in June, moving to 235,000 square feet at 30 Hudson Yards from their previous location at the New York Times building. According to a report by JLL, relocations accounted for nearly 60% of all lease signings in June, underscoring the trend of tenants seeking new, upgraded spaces.

The strong leasing activity on Park Avenue and in Midtown Manhattan can be attributed to several factors. Firstly, the ongoing redevelopments and renovations are making these areas more attractive to potential tenants. Modern amenities, improved building infrastructure, and strategic locations continue to draw interest from various sectors, including finance, law, and technology.

Secondly, the competitive market has prompted landlords to offer more attractive lease terms and incentives, making it a favorable time for companies to secure prime office space. The demand for high-quality office environments that cater to employee well-being and productivity is also driving the leasing boom.

In conclusion, Park Avenue’s leasing boom reflects a broader positive trend in Midtown Manhattan’s commercial real estate market. With significant investments in building redevelopments and a strong demand for modern office spaces, the area is poised to continue its upward trajectory. However, the challenges faced by Downtown Manhattan indicate that the recovery is not uniform across the city.