Weekly Market Report - May 4, 2026
- May 9
- 9 min read
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In April, the Manhattan office market experienced a strong performance highlighted by two substantial leases over 100,000 square feet. Law firm Cleary Gottlieb Steen & Hamilton secured the largest lease of the month with a 475,000-square-foot deal at Brookfield Properties’ 1 Liberty Plaza, while healthcare platform Tennr followed with a 125,000-square-foot sublease at Hudson Square Properties’ 345 Hudson St. Despite a drop in overall leasing activity from approximately 5.9 million square feet in March to about 3.6 million square feet in April—a 38% decline—the figure still surpassed the 10-year monthly average of approximately 2.8 million square feet.
The availability rate for office space in Manhattan slightly decreased to 13.4%, with an average asking rent of $77.50 per square foot, up 4.2% year-over-year. Manhattan's total available supply reached about 69.9 million square feet, the lowest since October 2020, indicating a continued market recovery. Noteworthy additional leases included Jump Trading at 50 Hudson Yards and AI company Sierra at 11 E. 26th St. Overall, major landlords are reporting positive leasing activity amid long-term concerns regarding changing office space needs due to AI advancements.
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Steven Roth’s firm purchasing 49% share at $1.1B valuation
Billionaire developer Zhang Xin is selling her 49 percent stake in Park Avenue Plaza to Vornado Realty Trust, led by Steven Roth, for a reported $1.1 billion valuation, below her initial expectations. The deal involves Vornado assuming $570 million in debt, with Fisher Brothers retaining joint control of the building upon closing, expected by the end of the quarter. Arranged by Newmark's team, including Adam Spies and Doug Harmon, the transaction reflects Xin’s strategy after listing her stake in January 2023.
The 1.2 million-square-foot building, nearly fully leased to tenants like Evercore and Morgan Stanley, has no significant lease expirations until 2035. Initially, Xin’s firm purchased the stake in 2011 from Rockpoint Group, alongside a $575 million refinancing package. Fisher Brothers and Vornado are actively engaging in Manhattan's office market, with Blackstone acquiring a 46 percent stake in another major property and both firms seeking new developments, including a large office tower at 350 Park Avenue. Controversies around the proposed pied-à-terre tax involving Citadel's Ken Griffin further complicate the scene.
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Five months after acquiring Paramount Group, Rithm Capital Corp. has rebranded it as Elecor Properties. The rebranding includes a $250M capital improvement initiative focusing on enhancing office space to attract top talent and foster collaboration. Rithm emphasizes that office space must now prioritize productivity over mere square footage. Planned renovations include a new lobby bar and amenity spaces at 1633 Broadway and 712 Fifth Ave. in New York, along with upgrades to One Market Plaza in San Francisco, featuring a new conference center and sky bar.
CEO Michael Nierenberg noted the importance of enhancing the work environment in modern office buildings. The acquisition, valued at $1.6B, was finalized in December, alongside other deals like Sculptor Capital Management. In its first-quarter earnings report since the acquisition, Rithm reported $289M in earnings available for distribution, a decrease from the previous quarter. Occupancy rates in the Paramount/Elecor portfolio rose 4.7% year-over-year, largely driven by new leases in San Francisco. However, Rithm Capital's share price fell nearly 2% to below $10 on the day of the announcements.
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Empire State Realty Trust's CEO, Tony Malkin, reported that their Manhattan office portfolio is 93% leased, reflecting a healthy leasing environment. Despite this, the company's stock price fell to about $5.60, having lost half its value in 18 months. While some investors see this as a prime buying opportunity for Manhattan commercial real estate, others fear that advancements in AI could reduce demand for office space. The firm is considering share buybacks, following competitors like Vornado Realty Trust, which announced a $300 million repurchase plan.
Empire State Realty's market capitalization has dropped to $1.7 billion for its 8 million-square-foot portfolio, with the Empire State Building valued at $1.3 billion, indicating limited value ascribed to other properties. The Malkin family has the authority to repurchase up to $500 million in shares, having previously bought back shares at an average price of $6.73. In Q1, the company leased 113,000 square feet but experienced an 18% decline in observation deck visits and a 20% drop in observatory revenue, attributed to poor weather and reduced tourism.
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Anthropic, an artificial intelligence company headquartered in San Francisco, is close to finalizing a significant expansion in Manhattan, reportedly negotiating to occupy AEW Capital Management’s entire 466K SF building at 330 Hudson St. The company has been searching for office space between 250K SF and 450K SF this year. The AEW building contains subleases extending until September 2028, facilitating a gradual move for Anthropic. Previously, Anthropic leased 16K SF at 155 Sixth Ave. in 2024, which may expire soon.
Founded by siblings Dario and Daniela Amodei, the company was valued at $380B in February and is poised for a funding round that might increase its valuation to $900B. Anthropic has been expanding in the Bay Area, signing leases totaling over 840K SF in downtown San Francisco in recent years. Other AI firms have also been rapidly acquiring office space in Manhattan, with significant leases signed in 2024 and a robust office leasing activity among AI companies continuing into 2025.
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Korean automaker bought 15 Laight Street for $274M in 2023
Hyundai is partnering with SL Green to lease a Tribeca office building at 15 Laight Street, acquired in 2023 for $247 million. Despite Hyundai never occupying the building, the automaker aims to capitalize on an improving leasing market. Manhattan's office leases rose from about 29 million square feet in 2022 to nearly 42 million square feet in 2023, as reported by Colliers. The building has attracted interest from several sizable tech firms due to its proximity to Google and Disney offices. SL Green's leasing director, Steven Durels, noted that Tribeca and Hudson Square are emerging as prime locations for creative and tech tenants, where the high-quality office supply is limited. CBRE's Doug Middleton represents Hyundai, while Ryan Alexander will manage leasing with Durels. 15 Laight Street was developed by Vanbarton Group on the site of a former cinema.
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AI firms are rushing to grab Manhattan’s most coveted office space, but desks outnumber employees. Some grow into them; others just want room to think.
Blake Anderson's AI startup, 10x, secured a 3,000-square-foot SoHo office for $28,500 per month but started with only one employee, leading to concerns about overcommitting. The rise of cash-rich AI startups is driving a new boom in Manhattan's commercial real estate, with leases skyrocketing. AI firms are leasing larger spaces than their current headcount necessitates, anticipating future growth and boosting credibility with clients. Many offices see more vacant desks than workers due to the current hiring landscape, but companies value the spacious environments for productivity. John Zhao of AI health startup Blossom signed a $17,000 monthly lease for a Flatiron space, balancing current staff with future expansion. Landlords remain cautious, closely evaluating startups before leasing.
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Hyundai Motor Group, after acquiring the Tribeca building at 15 Laight St. for $273.5 million in February 2023, has opted to lease the property instead of occupying it. The management of the 109,000-square-foot office building has been entrusted to SL Green Realty Corp., Manhattan's largest office landlord, which has made an investment through its $1.3 billion debt fund. SL Green President Harrison Sitomer emphasized their goal to create value for tenants by leveraging their leasing and operating expertise alongside credit capabilities.
The eight-story building, completed in 2021 by the Vanbarton Group after an initial $90 million site acquisition, is currently vacant. Hyundai's investment, made during the post-pandemic market recovery, was approximately $2,500 per square foot, a notable figure given the circumstances. Despite ambitious plans to invest $26 billion in U.S. operations by 2028, Hyundai's strategy may face challenges due to recent setbacks, including immigration issues at a battery plant in Georgia. The Tribeca building is now available for lease, overseen by SL Green's Steven Durels.
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Extell acquisition leads to speculation about what Barnett will do with the shuttered club
The Friars Club, a historic social club in Midtown known for its celebrity members, has been sold to Gary Barnett’s Extell Development for $19 million. The club’s past members included legends like Johnny Carson and Joan Rivers. Extell outbid various contenders, including a hospitality operator and crypto investors hoping to create a private club. Extell has been acquiring properties along Park Avenue, and speculation arises about Barnett’s intentions regarding the Friars Club. Positioned across from Barnett’s other acquisition plans, its significance adds intrigue. The Friars Club has limited air rights, having previously sold some in 1982, and its landmarked facade prevents demolition.
Potential paths for the club’s future include renovation into a private residence or an elite club. Alternatively, Barnett could be eyeing the nearby Brook, a secret private club adjacent to one of his properties, suggesting a potential integration. While the Friars Club's interior is not landmarked, allowing for remodeling, the building's historical essence remains. Founded in 1904 and known for celebrity roasts, the club faced financial struggles leading to its closure in 2020, exacerbated by the pandemic. Kairos Investment Management sold it after securing the property during a foreclosure. Barnett’s decision will influence the Friars Club’s legacy.
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Demand for office space in Manhattan is increasingly polarized, reflecting the U.S. economy's inequalities. A report by Cushman & Wakefield highlights that rents in newer Class A towers in Lower Manhattan now exceed those of older Class B buildings by over 25%, a significant increase from 14% two years ago. Class A rents rose by 3.5% since fall 2024, while Class B rents fell by 4%. Without significant investment in older buildings, continued rent declines and value disparities are anticipated. Downtown's vacancy rate was 22% in Q1 2026, double that of Park Avenue. Although developments like the World Trade Center thrive, many older properties face high vacancies and ongoing financial difficulties.
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Executives at Rudin seek to redesign the public plaza outside their Midtown Manhattan headquarters, following a fatal shooting last year that left four dead, including a company associate. Jane Luger and Andrew Migdon filed an application with the Department of City Planning to reduce the plaza at 345 Park Ave. The incident occurred when shooter Shane Tamura entered the building's lobby with an assault rifle, targeting individuals inside, including a police officer and a security guard. Tamura moved to the 33rd floor, killing Rudin associate Julia Hyman before taking his own life.
The plaza, originally encompassing nearly 25,000 square feet, will see a reduction of about 3,450 square feet from the eastern end, which currently does not provide building access and sits above street level for subway infrastructure. The redesigned plazas would total 21,478 square feet and remain publicly accessible. The application states that this reduction aims to enhance security and functionality while maintaining existing amenities. However, it remains uncertain how the proposed changes will specifically improve safety in the aftermath of the shooting, and Rudin has not commented on this connection. The legal firm representing Rudin did not respond for comment.
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The Hudson River Hotel, a Midtown budget hotel, has been seized by lenders after its owner, Shashin Gandhi, converted it into a homeless shelter without approval. Acquired out of bankruptcy for $18 million in June 2024, Gandhi entered a deal with the city on Sept. 1, 2025, to operate the 56-room hotel as a shelter for three years. However, this was deemed a default by a New York-based LLC that holds the hotel’s $14 million mortgage, which stipulated the property must remain a hotel. The LLC revoked Gandhi's operator's license and filed for foreclosure. The hotel, developed in 1999, struggled to attract business travelers despite its proximity to Hudson Yards, with a 2017 occupancy rate of 88%, lower than competitors at 98%. The hotel had previously filed for bankruptcy in 2022, leading to the transfer of ownership and mortgage to Gandhi, who owns several other commercial properties in New York City.
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Living in neighborhoods like Bedford-Stuyvesant, Bushwick, or Sunset Park is trendy among Brooklyn's young professionals, yet securing retail space remains challenging. At Bisnow's Brooklyn State of the Market event, brokers noted that retail is slow to develop, even in areas like Downtown Brooklyn with significant population density. Despite a 9% population growth before 2020 and a strong economic recovery post-pandemic, the retail landscape is evolving.
While areas like Williamsburg attract affluent shoppers and high rents, Downtown Brooklyn sees higher residential rents and more volume for retailers. Essential services proliferate, but character-rich small businesses are scarce. Developers often face a lag between residential occupancy and retail demand, with innovative indie brands starting to establish a foothold, suggesting a potential ecosystem for future retail development. However, areas like Gowanus and Sunset Park may require more time to attract retail interest.
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In just five minutes, I must defuse a bomb after completing complex tasks with teammates Alexander Patterson and Michon van As. We navigated laser beams, matched shapes to sounds, and played tic-tac-toe while avoiding fireballs, all to earn our chance in the bomb room. Patterson, the CEO of Beat The Bomb, crafted the bomb. Beat The Bomb is part of Dumbo's thriving experiential retail scene, which has grown since 2017, attracting families and office groups alike. Other establishments, like The Rat NYC and The Randolph, enhance the area's offerings with unique games and immersive experiences.
The Randolph expanded significantly to accommodate games like feather bowling, crucial for business recovery post-pandemic, where experiential retail became essential for attracting customers. Dumbo's arts scene also flourishes, with galleries hosting special events and opening studios to the public, supported by Two Trees Management. After successfully defusing the bomb, I eagerly accepted a paint blast, illustrating the adventurous spirit of Dumbo’s immersive experiences.
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