Latest Manhattan Office Recovery Signal? Record Rent

Manhattan’s office market had a milestone week.

This week, hedge fund Castle Hook Partners signed a lease for a 53,000-square-foot penthouse at Related Companies’ 625 Madison Avenue. Castle Hook plans to occupy its space in the second half of 2029, the year Related’s project is scheduled to be completed.

But the lease at the prominent office project didn’t just mark a win for the landlord. It set a new high bar for the market.

Castle Hook is expected to pay up to $21.2 million in rent annually for its space. That breaks down to somewhere in the range of $350 to $400 per square foot, easily surpassing the $327.50 per square foot record set at Stefan Soloviev’s 9 West 57th Street earlier this year.

It was only the spring when the Soloviev Group signed its own lease at 9 West 57th Street, setting a record for Manhattan office rent and surpassing the previous record of $320 per square foot. That tenant was a private international family office that signed a 10-year deal for 5,063 square feet on the 50th floor.

And in June, Soloviev began marketing another availability at the building, eyeing $400 per square foot for the 11,155-square-foot space on the 50th floor.

The deal at 625 Madison Avenue follows a banner performance for the market as captured by Colliers’ third-quarter report, when Class A average asking rents rose to $85.45 per square foot in the third quarter, surpassing pre-pandemic levels and reaching an all-time high. The period also marked the fourth consecutive quarter with more than 10 million square feet of leasing, a feat last achieved in 2002.

A few years ago, office landlords were looking to salvage whatever they could from their buildings, handing out concessions to get tenants in the door or even converting their properties to residences in response to the hybrid work model taking hold across the world.

Now, office landlords are competing to see which of their trophy office spaces can command the highest rents in the history of the market.

Not all owners are going to be able to command the rents that Soloviev and Related’s Jeff Blau have landed recently. It’s still a bifurcated market dictated by the tenant flight-to-quality, leaving questions for owners of Class B and Class C space.

But the average asking rent in Manhattan is rising and availability is falling, potentially creating more opportunities for eye-opening deals in the near future.

It’s October, which means a Spirit Halloween is coming for your local retail vacancy soon. Here are the other real estate moves that made headlines this week.

Douglas Elliman hits Ryan Serhant with cease-and-desist over veiled comments about Howard Lorber

Two big names in New York City brokerage clashed this week. Douglas Elliman issued a cease-and-desist letter to Ryan Serhant after he made critical, veiled comments about former chairman Howard Lorber during his brokerage’s annual event.

Elliman’s general counsel stated that Serhant’s account of a meeting was inaccurate and misleading, clarifying that Serhant actually initiated the meeting to present a business proposal rather than being recruited.

The cease-and-desist dispute follows renewed scrutiny over Elliman’s corporate culture in light of past controversies involving its former leadership.

Tishman Speyer secures Chrysler Building return

Don’t call it a comeback. Tishman Speyer and landowner Cooper Union finalized a 150-year ground lease to revitalize the Chrysler Building, supported by a $235 million investment.

Planned upgrades include refreshed arcade and 61st-floor amenities, facade restoration and ready-to-occupy office suite designs.

Tishman previously owned the tower before selling its stake in 2019, but stepped back in after prior leaseholder RFR’s ground lease was terminated in court.

“Shakedown artist”: Josh Gotlib and Meyer Orbach sue Jona Rechnitz for alleged defamatory campaign

Investors Josh Gotlib and Meyer Orbach are suing Jona Rechnitz for an alleged campaign of defamatory comments.

Rechnitz recently sent messages to regulators and others, accusing the investors of fraud.

The lawsuit follows Floyd Mayweather dropping his separate legal claims against Rechnitz in September.

Toll Brothers buys two properties next to Brandon Miller’s former development site

Finally, Toll Brothers purchased two properties at 126 10th Avenue and 456 West 18th Street for $45 million, expanding its Chelsea assemblage next to the development site formerly tied to Brandon Miller.

The homebuilder’s high-rise condominium division, Toll Brothers City Living, plans to construct a 114-unit residential building designed by CookFox with amenities including a pool, sauna, and playroom.

Sales for the new development are expected to launch in the spring of 2028.