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- Apple is in talks to grow a Manhattan office it leased earlier this year, according to a person with direct knowledge of the negotiations.
- While the deal is not yet definite, the negotiations are an example of how large, successful tech companies continue to take space even as tenants in other industries have ceased their leasing activity or have even sought to shed space.
- The potential deal is more evidence that big tech sees a future for the workplace, even as remote work has caught the eye of other large space users.
- Visit Business Insider’s homepage for more stories.
Fresh after cracking a $2 trillion market capitalization to again take the mantle as the world’s most valuable company, Apple is negotiating to expand its new New York City office.
The tech giant is in conversations with its landlord to add almost 60,000 square feet at 11 Penn Plaza, a Midtown office building where earlier this year it signed on for roughly 220,000 square feet. The company has additional options in the building to grab even more space.
A person with direct knowledge of the negotiations described the talks as ongoing and said there was “nothing concrete yet,” meaning that Apple had not yet definitively concluded on whether it will take the expansion space and, if it does, exactly how much.
A spokesperson from Apple did not respond to a request for comment.
While the square footage being contemplated by the firm is modest by the standards of corporate America, the potential deal reflects the way tech firms continue to expand even as tenants in most other industries have either put off real-estate decision-making as the future of the workplace remains uncertain, or have sought to cast off space.
Leasing activity in the second quarter in Manhattan, the nation’s largest office market by square footage and one of its most pricey, fell to just 2.5 million square feet, the lowest quarter of activity in 25 years, according to data from the commercial real-estate services firm and brokerage company Cushman & Wakefield.
Before the Covid-19 crisis brought leasing to a virtual standstill, roughly 8.4 million square feet of space had been leased per quarter on average over the previous three years.
Even as the economy has contracted by a record 33% amid the coronavirus crisis, many large tech firms have experienced a boom as Americans shift online to work, shop, and socialize. Last month, Apple reported stronger than expected third-quarter earnings.
Once a niche tenant group in the city, tech companies have grown dramatically in recent years. Google and Facebook have expanded into the city’s fifth- and sixth-largest office tenants with 3.2 million square feet and 3.1 million square feet respectively, according to Cushman data. The only bigger tenants are the major banks JPMorgan Chase, Morgan Stanley, Bank of America, and the coworking giant, WeWork, which is the city’s largest office tenant with about 8 million square feet in the city.
Earlier this month, Facebook struck a deal to take 730,000 square feet at the Farley Building, a century-old property on Manhattan’s West Side. The lease, which took months to complete, captured the attention of the city’s real estate industry for its significance as a bellwether for continued demand and a sign of hope that tenants expect to return to the workplace. Before that, Amazon purchased a building for over $1 billion on Fifth Avenue in Midtown that had previously been Lord & Taylor’s flagship department store, but is being converted over to office use.
Apple has had a much slimmer presence than its peers, but has been rumored to be intent on ramping up its operations in Manhattan.
While tech has been a bright spot, other industries continue to offer daunting news for the commercial real-estate market. A JPMorgan Chase executive, for instance, suggested in a report Tuesday that large divisions in the bank will rotate staff in and out of the office and utilize a partial remote work model, a decision that would appear to reduce the size of its office needs.
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