Japanese ad firm Dentsu eyes NYC sublease in sign of mounting office woes
[NEW YORK] A Japanese advertising firm is considering unloading what was supposed to be a new office in Manhattan, the latest signal that New York's market is facing pressure as companies cut costs and re-evaluate their real estate.
Dentsu Group is exploring plans to sublease space in Chelsea, where Tishman Speyer is renovating a former US Postal Service facility that was set to be the advertising firm's main US office, according to people with knowledge of the matter.
The brokerage CBRE is working with Dentsu.
"As part of their disciplined business strategy, our client Dentsu is assessing their real estate footprint to be aligned with their people and business's needs in our new normal," CBRE said in a statement. "With new opportunities for the future of work, they are exploring various workspace strategies including the optimisation of their office space across five locations in Manhattan." A representative for Tishman Speyer declined to comment. Dentsu didn't immediately respond.
Offices have held up better than hotels, malls and other types of commercial property in the pandemic, in large part because companies are locked into leases and have continued to pay rent even as employees work from home. But the jump in available sublease space signals that Manhattan landlords are facing pressure as the pandemic drags on.
Tenants put 2.5 million square feet on the market in the third quarter, more than double the amount from a year earlier and the biggest increase since the global financial crisis. The glut of available offices is pulling down rents.
A NEWSLETTER FOR YOU
Property Insights
Get an exclusive analysis of real estate and property news in Singapore and beyond.
Dentsu signed a lease with Tishman last year for more than half of the 630,000-square-foot office redevelopment at 341 Ninth Ave., just east of Hudson Yards. Construction on the project started this year and the company had planned to consolidate its New York City-based employees in the building starting in 2023.
Dentsu recently reported quarterly profit that was down 60 per cent from a year earlier, with the pandemic battering the advertising industry.
The potential sublease was reported earlier by Business Insider.
BLOOMBERG
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
Property
Singapore office rents in central region fall 1.7 per cent in Q1 after rising for 9 quarters
Singapore retail rents slip 0.4% in Q1 as vacancy rates creep up
Country Garden plans to present debt revamp plan in H2, sources say
Hong Kong home prices rise for first time in 11 months after curbs scrapped
HDB resale prices accelerate, rising 1.8% in Q1 on stronger demand
Private home prices ease to 1.4% rise in Q1; rents fall a further 1.9%