TikTok’s Manhattan Lease Ends COVID Cold Spell
- May 29, 2020
The parent company of popular video-sharing app TikTok has signed a 10-year lease for 232,000 square feet in Manhattan’s Times Square, marking the first major office lease in the borough since the coronavirus crisis put business activity on hold in March.
Beijing-based ByteDance is taking the seven-story space in One Five One, a 48-story Midtown skyscraper owned by The Durst Organization. TikTok and Durst inked the lease last week, and lenders are expected to sign off on the transaction in a week or two, according to an account in the Commercial Observer, which first reported the story. A Durst representative confirmed the story to Commercial Property Executive.
Built in 1999, the green-friendly tower formerly known as 4 Times Square or the Condé Nast Building is located at 151 W. 42st St., between Sixth and Seventh Avenues and just west of Bryant Park. Durst recently completed a $150 million overhaul of the 1.8 million-square-foot skyscraper that brought a new lobby and entrances, among other upgrades.
TikTok will occupy five floors at the top of the building that were previously leased to law firm Skadden Arps, as well as two floors in the base that were occupied by Condé Nast before the media company moved to One World Trade Center in 2014. Terms of the lease were not available, but asking rents reportedly ranged from $105 to $135 per square foot for the Skadden floors.
The building has about 326,000 square feet of space available following TikTok’s lease. Nasdaq Inc. moved its global headquarters to the property last year after signing the 15-year, 145,000-square-foot lease expansion in 2018.
Chinese app makes New York inroad
TikTok began hunting for space last year, starting with a more modest 50,000-square-foot requirement, according to a source cited by the Commercial Observer. The tenant was represented by CBRE’s Sacha Zarba, Jeffrey Fischer and Alice Fair, while Durst was represented in-house.
The lip-syncing video service employs about 400 people in the U.S., mostly in Los Angeles County’s Culver City, and previously had a small office in Manhattan. ByteDance this month tapped former Disney streaming chief Kevin Mayer to serve as COO of the parent firm and CEO of TikTok, as part of an apparent strategy to shift resources out of China.
The tech giant, which according to Bloomberg is now valued at more than $100 billion, introduced TikTok in the U.S. after merging it with social media app Musical.ly in 2018. TikTok was downloaded 315 million times in the first quarter of 2020, an all-time record for any app, and the platform reeled in 39.2 million U.S. users 18 and older in April—tripling year-over-year.
The federal government’s Committee on Foreign Investment in the U.S. (CFIUS) has launched a national security investigation into ByteDance’s acquisition of Musical.ly, Reuters reported last November.
Big Apple lures big tech
The new deal by the world’s most downloaded app suggests that Manhattan maintains its magnetism as a growing tech hub. Amazon signed a 335,408-square-foot lease for the upcoming 410 Tenth Avenue in the Far West Side last December, doubling down on its existing footprint in the neighborhood.
Facebook leased more than 1.5 million square feet across three buildings at the nearby Hudson Yards mega-project last November and Google is also expanding in the West Side, with a planned $1 billion campus in Hudson Square further to the south. Facebook is also closing in on a roughly 740,000-square-foot lease at Vornado’s Farley Post Office complex near Penn Station, the Commercial Observer reported.
The coronavirus pandemic and associated social distancing measures brought leasing to a near standstill in March as travel to New York City plummeted, businesses closed and much of the population switched to working from home. Office leasing totaled 6.4 million square feet in the first quarter of 2020, the lowest first-quarter level since 2009, according to a market report by Newmark Knight Frank. Monthly leasing activity in Manhattan dropped from 2.8 million square feet in January to 2.3 million square feet in February and 1.4 million square feet in March, the report found.