HNA Boosts Manhattan Leasing Activity With New Deals

In the midst of an underperforming market, HNA Group scored three leases at 245 Park Avenue in Midtown.
245 Park Avenue

Japanese conglomerate HNA Group has signed three leases covering a combined 224,408 square feet at its 245 Park Avenue tower in Manhattan. SL Green Realty Corp. arranged the deals—two renewals and a new commitment of an existing subtenant—as leasing agent of the property.

The announcement comes on the heels of SL Green securing 100,000 square feet with Beam Suntory earlier this week at its 11 Madison Avenue building in the Flatiron District. The spirits company will relocate its corporate headquarters from Chicago by mid-2022.

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In 2017, HNA purchased the 1960s vintage tower from Brookfield Property Partners and the New York State Teachers’ Retirement System, in one of the largest office transactions ever recorded in the borough. The skyscraper commanded a whopping $2.2 billion, backed by a $1.7 billion loan, according to CommercialEdge.

The 1.7 million-square-foot tower in Midtown East rises 44 stories on a full block between 46th and 47th Streets and offers direct access to Grand Central Terminal. In the spring of 2018, due to financial difficulties, HNA tried to sell the property, which was in need of a thorough rehab, as reported by Bloomberg. Their efforts resulted in the sale of a $148 million stake to SL Green, who became the manager of the property.

Three New Deals

Global alternative investment manager Ares Management Corp.’s five-year renewal and expansion will cover 38,564 square feet on the 41st floor of 245 Park Ave. Savills’ Dan Horowitz, Jeff Peck, John Bertram and Roi Shleifer represented the tenant.

Norinchukin Bank will occupy the entire 21st floor, with its five-year lease renewal comprising 37,611 square feet. JLL’s Daoud Awad and Hitoshi Aratani arranged the deal for the Japanese cooperative bank.

Global investment bank Houlihan Lokey Inc., which was already subleasing space at the skyscraper, inked a new ten-year lease for 148,233 square feet and will occupy floors 17 to 20. John Maher, Paul Stimpfle and Peter Gamber of CBRE worked on behalf of the tenant.

SL Green collaborated with Cushman & Wakefield’s Patrick Murphy, Tara Stacom, Ron LoRusso, Justin Royce, Pierce Hance and Will Yeatman in representing the landlord in all three transactions.

Leasing volume hits record lows

With office leasing volume declining every election year, COVID-19 further lowered the figures in 2020. The challenging environment resulted in record lows for Manhattan’s office leasing market, according to the latest New York Market Report from Avison Young. Coming in at 14.2 percent, the overall vacancy rates in the fourth quarter rose to unprecedented heights.

Last year’s lease expansions made up only 2 percent of the total leasing volume, compared to 11 percent in 2019, a significant drop, mirroring tenants’ hesitant mood. Renewals and subleases accounted for 25 percent of leasing activity, a modest year-over-year increase . Only 29 deals were in excess of 100,000 square feet, compared to 63 in 2019. However, two transactions surpassed 600,000 square feet: Facebook’s 730,000-square-foot lease at 390 Ninth Avenue and NYU Langone Medical Center’s extension at One Park Avenue.