Sixth Avenue is the new Fifth Avenue

By Steve Cuozzo, NYPost

Move over, Park Avenue — Sixth Avenue is the towering king of Manhattan commercial boulevards. The under-celebrated corridor is enjoying an office-leasing boom, with a surge of first-class new development, and the healthiest retail market in town.

Big Six never got much respect. Apart from being home to Radio City Music Hall and for hosting Macy’s Thanksgiving Day Parade since 2012, its main claim to pop-culture fame (or infamy) was rock band The Wallflowers’ “Sixth Avenue Heartache,” an obscure 1996 tune about homeless people. For added insult, the video’s key scene was shot on Fifth Avenue.

But you’ve gotta see the place now — a thriving nexis of corporate and media headquarters humanized with stores, hotels, apartment buildings and funky landmarks from Franklin Street to Central Park South.

Office availability on Sixth from 42nd to 59th streets fell to 11.4 percent in the last quarter of 2016, compared with 11.8 percent in Midtown overall, according to CBRE. It was a remarkable comeback for Big Six from 13.7 percent availability in Q1 of 2013, when some brokers were predicting a 25 percent vacancy rate once several big leases expired.

Scott Rechler, the CEO of RXR Realty, which owns 1285 and 1330 Sixth, said, “The death knell of Sixth Avenue has been forecast two or three times” in recent years. “What a difference a year or two makes.”

The avenue’s strength is reflected in asking rents as high as $120 a square foot in upper floors of 1330 Sixth, where only 10 percent of about 526,000 square feet are available — a strapping “ask” for a 1965 tower.

RXR bought 1285 Sixth last year for $1.7 billion. Prior to the purchase, UBS was widely expected to move out. But RXR’s planned building improvements persuaded the firm to renew its 900,000-square-foot lease.

Another morale-builder for avenue landlords was 21st Century Fox’s and Post parent News Corp.’s decisions in January to extend their leases at Ivanhoe Cambridge and Callahan Capital Properties’ 1211 Sixth, where for good measure Fox added 128,000 more square feet.

Landlords are spending fortunes to make late-20th century towers attractive to digital-age tenants. Rockefeller Group is putting an entire new skin on 1271 Sixth, the former Time & Life Building, as well as transforming its public spaces. Fisher Brothers, the Durst Organization and Vornado are all spending in the tens of millions on their own properties.

The largest single new lease in Manhattan for 2016 was Major League Baseball’s deal for 418,000 square feet at Rockefeller’s 1271 Sixth. Rockefeller Chief Executive and co-President Dan Rashin says, “MLB would not have come” to 1271 Sixth had the owners opted for less than a top-to-bottom redesign and infrastructure redo.

MLB will consolidate at 1271 Sixth from 245 Park Ave. and from Chelsea Market. The latter is where the league’s BamTech division is currently based. Rashin said, “It’s great to have a technology group” — a kind of tenant usually associated with Midtown South. Rockefeller also owns 1221 Sixth, the former McGraw-Hill Building, where it signed insurance firm Endurance for 143,000 square feet in January.

Rockefeller Group and the Avenue of the Americas Association, a civic improvement organization, recently gleaned from CoStar Group data that 37 of last year’s 50 largest Manhattan office leases (new, renewals and expansions) were in Midtown. Sixth Avenue boasted eight, tied with Park Avenue for the lead. But Park’s total square footage was a mere 1.3 million compared with 2.3 million on Sixth.

Sixth Avenue also led handily in new-lease volume — 1.018 million square feet, followed by Park (663,290 square feet) and Third (594,334 square feet).

The teeming corner of 42nd Street and nearby epitomize the vibrancy. Durst’s spire-topped 1 Bryant Park/Bank of America tower, completed in 2009, added angles and color to the avenue’s once-flat skyline. Next to rise was 7 Bryant Park at 40th Street, which Hines built on spec and sold to Bank of China for $600 million.

A huge Whole Foods has opened at Ivanhoe Cambridge and Callahan’s 1095 Sixth. Brookfield Office Properties just bought the ground lease of 1100 Sixth — an expression of confidence in the tower that HBO plans to leave for Hudson Yards in 2018.

Once a shoppers’ wasteland, Sixth has fewer retail vacancies from end to end than any other avenue. Its prime northern blocks are now home to stores as diverse as piano showroom Steinway Hall at 1133 Sixth, Kinokuniya Books at 1073, Knoll Home Design at 1330 Sixth and, soon, to a giant Nordstrom Rack at Durst’s 830 Sixth.

Published: March 16, 2017
Filed Under: Community Relations

The RXR platform manages 61 commercial real estate properties and investments with an aggregate gross asset value of approximately $18.5 billion, comprising approximately 24.4 million square feet of commercial properties, inclusive of a multi-family residential portfolio of approximately 2,600 units under operation or development, and control of development rights for an additional approximately 3,700 multi-family and for sale units in the New York Metropolitan area. Gross asset value compiled by RXR Realty in accordance with company fair value measurement policy and is comprised of capital invested by RXR and its partners, as well as leverage.