Fund managers are making waves with office leases, but even their deep pockets aren’t enough to take over the beleaguered market.
Hedge funds and investment firms are adopting offices in Manhattan, unlike many other companies that are opting out, Bloomberg reported. Financial services companies, insurers, private equity, hedge funds and asset managers accounted for 35% of new leases over the past two years by square footage, according to Savills Research.
As stock markets rose in 2020 and last year, the fortunes of many fund managers also rose, allowing them to increase hiring. Many of these companies are looking for a space that appeals to employees.
“With the market as it currently stands and the vacancies, they are using it as an opportunity for growth and providing their employees with great environments to continue to attract and retain talent,” said Callie Haines, Director of Brookfield Properties, upon publication.
Blackstone, for example, considered options to expand to 345 Park Avenue or relocate. The private equity firm is reportedly looking for 1.5 million square feet.
Asset manager Wellington Management is opening its first outpost in the city, looking to accommodate a staff that could grow from fewer than 100 employees to between 400 and 500. The company plans to occupy four floors in the office building of 12 floors of Columbia Property Trust. at 799 Broadway.
And yet, all the fund managers in the world do not seem to be enough to stem the losses of the office sector. According to Savills, about 90 million square feet were available for lease in the first quarter, but leases for only 7.7 million square feet have been signed.
The availability of subletting also continues to increase. Nationwide, it rose 3.6% to 159 million square feet in the first quarter, according to CBRE. In Manhattan, more than 20.2 million square feet of sublease space was available.
[Bloomberg] —Holden Walter-Warner