Is the Office Flight to Quality as Prevalent as We’ve Been Led To Believe?

Flight to quality is an inescapable term in any conversation about the office market these days. The trend of companies favoring higher-quality office buildings certainly seems to be playing out in many office markets in the U.S. and internationally, especially in Manhattan. Manhattan’s office market saw 190 leases of at least $100 per square foot in 2022, according to JLL. It was a record number of new leases at that price point that beat the previous record set not too long ago, in 2021.

The $100-per-square-foot leases last year accounted for 6.1 million square feet in Manhattan, more than doubling the size of premium leases from 2021. There were 15 leases of at least $200 per square foot and two leases at SL Green’s One Vanderbilt for more than $300 per square foot. Most of the leases at these premium price points (62 percent) were signed at buildings that were either new or recently upgraded. 

Manhattan’s biggest office owners are well aware of this trend. SL Green is close to finishing its newest trophy asset in the borough, the 27-story One Madison Avenue. The building is already 55 percent leased and is expected to come online in late 2023, with IBM as an anchor tenant. SL Green just recently opened One Vanderbilt in 2020, the 1,401-foot supertall that’s now 99 percent leased. “Even though you could say the broader market has slowed on overall leasing velocity over the last three or four months, that doesn’t mean it’s necessarily true for every single

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