https://commercialobserver.com/2025/10/anchor-tenants-manhattan-office-2025/
Anchor Tenants Are Disrupting Manhattan’s Office Market — in a Good Way
By Isabelle Durso
October 28, 2025
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It looks like anchor tenants are the shiny new toy in New York City’s office market.
A handful of high-profile developers are moving forward with huge premier office projects in Manhattan (mostly in Midtown), and they’re all negotiating with the same species of anchor tenants. Some of them already have deals signed with these tenants — mostly financial services, tech and law firms — even though the projects won’t be completed for at least another few years.
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For example, in April, financial advisory firm Deloitte agreed to lease 800,000 square feet at 70 Hudson Yards, a more than 60-story, 1.1 million-square-foot office skyscraper being developed by Related Companies and Oxford Properties on Manhattan’s West Side. Deloitte will leave its current headquarters at 30 Rockefeller Plaza for the new building, which isn’t set to be completed until late 2028.
Then, in September, global law firm Simpson Thacher & Bartlett agreed to take roughly 700,000 square feet at Extell Development’s 570 Fifth Avenue development, which is set to become a 29-story office and retail building anchored on the retail side by Ikea. That project is also expected to top out by the end of 2028.
Most recently, BXP reached a tentative deal in October with insurance and investment giant C.V. Starr to lease roughly 30 percent, or 275,000 square feet, of its $2 billion 343 Madison Avenue office development, which should be completed by 2029.
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“The spark was because the financial service sector, and all of the law firms, consulting firms and accounting firms that are clustered around the financial service sector, have been in a serious organic growth and consolidation mode,” Mary Ann Tighe, CEO of CBRE’s New York tri-state region, told Commercial Observer.
“This growth sector in New York believes deeply that the in-office experience is essential,” Tighe added. “And, even further than that, they realize that the quality of real estate is a recruiting tool, and so they’re looking to upgrade their environment. They’re looking to bring people together. And that’s an equation that equals a newer building and a big block of space.”
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Newer buildings and big blocks of space are certainly on the way. Besides the ones listed above, there’s BXP’s 3 Hudson Boulevard, RXR and TF Cornerstone’s 175 Park Avenue, Related’s 625 Madison Avenue, Tishman Speyer’s 99 Hudson Boulevard, Silverstein Properties’ 2 World Trade Center (where American Express is rumored to be the anchor tenant), and Vornado Realty Trust and Rudin’s 350 Park Avenue for Citadel’s headquarters, to name a few. J.P. Morgan Chase’s new owner-occupied, 2.5 million-square-foot HQ at 270 Park Avenue also just opened, with a potential de facto J.P. Morgan neighborhood on the way too.
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Manhattan’s overall office inventory dropped from 466.1 million square feet in the second quarter of 2025 to 449.4 million square feet during the third quarter, according to a recent report from Savills.
That’s 16.7 million square feet of office inventory deleted in just one quarter. The culprit could likely be office-to-residential conversions, as 4.1 million square feet of conversions had already commenced in 2025 as of August and another 8.8 million square feet are on the way, according to a recent report from Cushman & Wakefield.
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What happens next is a cycle: New real estate comes on the market, that space gets leased up almost immediately by top occupiers, and the rest of the market’s tenants are left to fill in the gaps. Not to mention, new tenants entering Manhattan will have a pretty hard time finding any leftover space.
“What we are witnessing in the market is akin to musical chairs among large anchor tenants,” said Paul Glickman, vice chairman and international director in JLL’s New York office. “When the music stops, we are very likely not going to have enough suitable sites to accommodate the demand.”
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As a result of the competition, most trophy office buildings in popular areas such as Bryant Park and along Park Avenue are nearly fully leased, with vacancy rates around 1 percent and rents in the hundreds of dollars per square foot. At the Seagram Building, for example, rents are around $285 per square foot. And, at One Vanderbilt, an eye-catching office tower that opened toward the start of the pandemic, there’s no space left.
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On the bright side for tenants, new office developments in Midtown are slowly helping to bridge the gap. The developments are gradually but surely giving existing office assets in Midtown “a little bit of breathing room” as anchor tenants move to new space, allowing those assets to “serve existing clients better,” according to Hilary Spann, executive vice president of BXP.
Anchor tenants are indeed shifting their gaze to new stock as developers vie for their attention. In fact, developers that have already secured an anchor tenant lease are way ahead in the game, as those pre-leasing deals are “the solution” for some properties to move forward with construction financing, according to CBRE’s Tighe.
“What would be optimal for most developers is if they have the rent start as close to completion as possible,” Tighe said. “The tenant is always the solution, and, in the case of new construction in New York, it’s always the solution.”
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Anchor tenant leases — which often have a minimum length of 15 to 20 years in order for developers to secure financing — also all require the same basic elements, Tighe added.
“With anchor leases, you’re solving for three things,” Tighe said. “You’re solving for scale. You’re solving for the creditworthiness of the tenant, because that’s what you’re taking to the bank to get your loan. And the third thing you’re solving for is a tenant who can be in the base of the building. You’re not doing a 2 million-square-foot building and putting the anchor at the top, because what year is the top coming?
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This month, SL Green closed on its deal to buy the former Brooks Brothers building at 346 Madison Avenue — as well as the adjacent 11 East 44th Street — for a total of $160 million, with plans to build a 41-story office building.
SL Green is beginning the process of soliciting architectural designs for the roughly 800,000-square-foot project and plans to deliver the building to tenants in late 2030, according to Durels. He added that SL Green will likely build the project on spec without having a significant anchor tenant at the outset, similar to its highly successful One Vanderbilt development.
“This one by comparison to One Vanderbilt should be very straightforward,” Durels said. “The entire site sits on bedrock, while One Vanderbilt was up against the shuttle subway on one side of the building, and at the north corner of the building had Metro-North tracks that cut across the corner of the site. So it was a much more complicated site, whereas the Brooks Brothers site is very straightforward.”
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