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US law firm Paul Weiss has signed the largest commercial office lease in the country this year, according to its new landlord, taking more than 18 floors of a Midtown Manhattan skyscraper in a move that underlines its private equity-fuelled growth over the past decade.
Real estate group Fisher Brothers said on Thursday that it had agreed to lease 765,000 square-foot at 1345 Avenue of the Americas to Paul Weiss for 20 years, after investing $120mn in upgrading the building, with the help of JPMorgan.
“As we look ahead to a new year, this lease underscores an important global institution’s commitment to having an in-person footprint in New York City,” said Winston Fisher, partner at Fisher Brothers. “New York City continues to be an unparalleled place to do business”.
Asking rents in the building range between the high $80s per square foot on the lower floors to $135 near the top of the tower, according to Fisher Brothers.
Paul Weiss has about 1,000 lawyers, and its roots in the city trace back to the late 19th century. It is currently based a few blocks away from the refurbished property.
The firm has been on a hiring spree in recent months, poaching private equity partners from Kirkland & Ellis, Linklaters and Clifford Chance, and expanding its practices in New York, Los Angeles and London.
Paul Weiss chair Brad Karp said the property was “ideal” to accommodate the firm’s “global growth”. Recent upgrades include touchless elevators, 5,500 square feet of “flexible meeting space” and a wellness centre, according to Fisher Brothers, as well as New York City’s “largest indoor terrarium” and hybrid meeting spaces.
The announcement is a welcome boost for a Manhattan office market that has been in a deep slump. At the end of the third quarter, leasing activity was down a third, in square-foot terms, compared with the previous year, according to Avison Young, a commercial real estate adviser. The New York City office market, the world’s largest, was on track for its worst year since 2020, which was marked by the Covid-19 pandemic.
Like other cities, New York’s office market has been hit by remote working. It has also suffered from a retrenchment by tech firms, which had been huge sources of office demand in recent years.
While the overall market has been weak, a bright spot has been top-quality buildings with the latest amenities, which are still fetching robust rents. Many of those are new towers, such as SL Green’s One Vanderbilt and the Related Companies’ Hudson Yards.
But other developers, including Fisher Brothers, have bet that they can offer similar quality by reinvesting in existing towers. That may appeal to companies looking to upgrade their space without paying exorbitant rents.
The deal also confirms the appeal of law firms as tenants in the current market, according to some developers. Their apprenticeship model obliges them to have staff in the office as much as possible so that junior lawyers can learn from more senior colleagues. Paul Weiss currently requires staff to spend three days a week in the office, on average.
One veteran New York City broker called the Paul Weiss lease “a major deal in any market, at any time, but especially when there is still a narrative abroad predicting the death of the office”.
