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Major Leasing Milestone for Fisher Brothers in New York’s Challenging Office Market
Paul Weiss, a prestigious US law firm, has achieved a notable milestone in the commercial real estate sector. The firm has finalized the largest office lease in the United States for the current year. This landmark agreement involves occupying over 18 levels of a towering skyscraper in Midtown Manhattan. This significant move highlights the firm’s robust expansion, powered by its successful endeavors in private equity over the last ten years.
On Thursday, Fisher Brothers, a leading real estate entity, disclosed the lease agreement. The deal encompasses 765,000 square feet at 1345 Avenue of the Americas and spans a duration of 20 years. This decision follows Fisher Brothers’ substantial investment of $120 million in refurbishing the building, aided financially by JPMorgan.
Winston Fisher, a partner at Fisher Brothers, emphasized the lease’s significance. He remarked, “As we anticipate the upcoming year, this lease demonstrates a major global institution’s dedication to maintaining a physical presence in New York City. New York City remains an unrivaled hub for conducting business.”
Rental rates in this high-rise vary considerably, with the lower floors commanding high $80s per square foot, escalating to around $135 on the uppermost levels, as per Fisher Brothers’ data.
With approximately 1,000 legal professionals, Paul Weiss has deep historical connections to the city, dating back to the late 19th century. Presently located a short distance from the newly renovated building, the firm has recently intensified its recruitment efforts. This includes attracting private equity specialists from renowned law firms such as Kirkland & Ellis, Linklaters, and Clifford Chance, and expanding its operations in New York, Los Angeles, and London.
Brad Karp, chair of Paul Weiss, described the newly leased property as “ideal” for fostering the firm’s global expansion. The building’s recent enhancements encompass touchless elevators, a substantial 5,500 square feet of adaptable meeting space, and a wellness center. Additional features include New York City’s largest indoor terrarium and state-of-the-art hybrid meeting facilities, according to Fisher Brothers.
This announcement is a positive development for the struggling Manhattan office market. At the end of the third quarter, leasing activity had decreased by a third compared to the previous year, as reported by Avison Young, a commercial real estate consultancy. The New York City office market, the largest globally, was poised for its most challenging year since the 2020 pandemic.
New York, like other metropolitan areas, has been impacted by the shift towards remote working and a decrease in demand from technology companies. However, high-end buildings with modern amenities continue to attract robust rental rates. These include recent constructions like SL Green’s One Vanderbilt and the Related Companies’ Hudson Yards.
Fisher Brothers and other developers are banking on the idea that reinvesting in existing towers can offer comparable quality without exorbitant rental costs. This strategy could attract businesses seeking to upgrade their facilities.
The deal also underscores the desirability of law firms as tenants in the current market, as noted by some developers. The apprenticeship model in law firms necessitates in-person work, aiding junior lawyers in learning from their seniors. Presently, Paul Weiss mandates staff to spend an average of three days per week in the office.
A seasoned New York City broker labeled the Paul Weiss lease as “a major deal in any market, at any time, but particularly notable in the current climate with ongoing predictions of the demise of the office.”
