IBM Gives Manhattan Thumbs-Up, Takes 328 KSF

One Madison Avenue. Image courtesy of SL Green Realty Corp.

IBM has announced a major commitment to SL Green Realty Corp.’s upcoming One Madison Avenue tower in Manhattan’s Midtown South. The tenant signed a 328,000-square-foot, 16-year lease at the 1.4 million-square-foot skyscraper. The commitment marks one of the borough’s largest leases of the quarter.

IBM will have an exclusive lobby entrance at the property and will occupy floors eight through 10, as well as portions of the second and seventh floors. Recently, Chelsea Piers Fitness also made a long-term commitment at One Madison, with a 20-year, 56,000-square-foot lease.

Located adjacent to Madison Square Park, the tower is slated for delivery in November 2023. The renovation and extension project includes 900,000 square feet, topped by more than 500,000 square feet of newly constructed space. In November 2020, SL Green, along with its joint venture partners, closed on a $1.3 billion construction loan for the project.

Attracting big players

In May 2020, The National Pension Service of Korea and Hines joined the development team of One Madison Avenue, with the $493 million purchase of a 49.5 percent stake in the property. In December 2021, SL Green sold another 25 percent share of the building to an international investor.

Last May, IBM spinoff Kyndryl committed to 22,531 square feet at SL Green’s One Vanderbilt trophy tower, also in Midtown. The space will serve as the global headquarters of the information technology infrastructure provider.

One Madison’s will offer a DOAS HVAC system, floor-to-ceiling windows and a large roof terrace. Amenities include a 13,000-square-foot restaurant, a 10,000-square-foot food market, a 7,000-square-foot club-style lounge, as well as 5,000 square feet of roof deck.

Cushman & Wakefield’s Patrick Murphy, Josh Kuriloff and Winston Schromm represented IBM in the lease signing, while JLL’s Paul Glickman, Alex Chudnoff, Diana Biasotti and Ben Bass worked on behalf of the landlord.

Office occupancy in Manhattan

In January, Manhattan’s office vacancy clocked in at 12.8 percent, placing the metro second among gateway markets, after Boston (10.7 percent), according to CommercialEdge data. On a year-over-year basis, the borough increased its vacancy by 230 basis points.

The same month, the Gramercy Park submarket—which includes the Flatiron District where One Madison rises—was close to the metro’s average, baring a 12.4 percent rate. Hudson Square was one of the submarkets with the lowest vacancies, hitting 5.6 percent, while the Financial District was on the other side of the spectrum, at 15.4 percent.