The Seagram Building is a 38-story building located in midtown Manhattan. Image courtesy of Blue Owl Capital
RFR Realty has signed a lease expansion agreement with Blue Owl Capital for the Seagram Building, an 891,998 square foot office tower in Manhattan. The alternative asset manager expanded its 168,597 square foot lease to 238,673 square feet. Cushman & Wakefield negotiated on behalf of the tenant and RFR acted as in-house representative.
This isn’t the first time Blue Owl’s footprint has expanded at Seagram. Last year, the company agreed to occupy an additional 31,597 square feet. The company originally committed to building the 137,600-square-foot site in 2022, but has since nearly doubled its presence in Class A+ real estate.
Including the Blue Owl expansion, the office tower’s leases by the end of the year will total more than 350,000 square feet (including additions and new leases), with nearly 100 percent occupancy. The tenant roster includes Fiera Capital, Centerbridge Partners, Clayton, Dubilier & Rice, and more.
Class A+ office tower in midtown Manhattan
RFR acquired The Seagram Building from Nuveen Real Estate in 2001 for $371 million, according to information from CommercialEdge. Last year, the company paid down $1.1 billion in debt on the property dating back to 2013 through a $1.1 billion refinancing package that included approximately $360 million in equity from JVP Management.
The 38-story tower, designed by architects Ludwig Mies van der Rohe and Philip Johnson, debuted in 1958. The high-rise building has floor-to-ceiling windows, EV charging stations, bike storage, and floor space ranging from 15,700 to 39,100 square meters. feet. The tower aims to achieve LEED and Fitwel certification.
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In 2022, the landowner completed the 34,000-square-foot Seagram Playground, which includes sports-oriented facilities and a town hall that can accommodate up to 240 people. The 11th floor also includes a terrace lounge, three restaurants, and event space.
The Seagram Building, located at 375 Park Ave., is less than 4 miles from downtown Manhattan. Central Park, Rockefeller Center and Grand Central are less than 1 mile away.
Mark Weiss of Cushman & Wakefield negotiated the deal on behalf of Blue Owl Capital. RFR Realty Executive Vice President AJ Kamhi and Senior Vice President Paul Milnek served as self-representatives.
Companies in expansion mode
In fact, Blue Owl’s recent expansion deal goes beyond just a new office lease. The company recently entered into a $3.4 billion joint venture with Crusoe Energy Systems and Primary Digital Infrastructure to develop a 206 MW, 998,000 square foot data center in Abilene, Texas.
And last week, Blue Owl signed a deal to pay nearly $1 billion to IPI Partners, a digital infrastructure fund manager founded in 2016 by a joint venture between ICONIQ Capital and Iron Point Partners. IPI had about $10.5 billion in assets under management as of June.
Office demand in Manhattan increases as visitors increase
At the national level, most return-to-office policies are not implemented, with only 17% of companies actively implementing return-to-office policies. But visitors to Manhattan offices are inching closer to pre-pandemic levels.
Higher office walk-in rates were reflected in Cushman & Wakefield’s third-quarter report as leasing activity picked up. As of September, new office leasing activity in Manhattan reached 16.7 million square feet year-to-date, an increase of 31.1 percent from the same period last year.
As a result, the borough’s overall vacancy rate fell by 20 basis points in the quarter to 23.5%, the report shows. A further contributing factor to the decline in vacancy rates was the lack of new office development for the second consecutive quarter.
Renewed area in the first nine months totaled 6 million square feet, an increase of 38.3% year over year. Year-to-date through September, the district’s office leasing activity totaled 22.7 million square feet, an increase of 33.1 percent from a year earlier.
If market conditions hold, Manhattan’s office market could overtake full-year leasing activity in 2023 by the end of October, according to the report.
