Manhattan’s office market reached a new milestone this week as hedge fund Castle Hook Partners signed a lease for a 53,000-square-foot penthouse at Related Companies’ 625 Madison Avenue. The deal is expected to generate up to $21.2 million in annual rent, translating to between $350 and $400 per square foot, which surpasses the previous record of $327.50 per square foot set earlier this year at Stefan Soloviev’s 9 West 57th Street.
Castle Hook plans to occupy the space in the second half of 2029, when Related’s project is scheduled for completion. The lease not only marks a win for the landlord but also sets a new high bar for the market. Earlier this spring, the Soloviev Group signed a 10-year lease with a private international family office for 5,063 square feet on the 50th floor at 9 West 57th Street, setting a record at $327.50 per square foot and surpassing the previous record of $320 per square foot. In June, Soloviev began marketing another space on the 50th floor, eyeing $400 per square foot for 11,155 square feet.
The record-breaking deal follows a strong third quarter for the office market, according to Colliers’ report. Class A average asking rents rose to $85.45 per square foot, exceeding pre-pandemic levels and reaching an all-time high. The period also marked the fourth consecutive quarter with more than 10 million square feet of leasing, a feat last achieved in 2002.
A few years ago, office landlords were forced to offer concessions or convert properties to residences amid the rise of hybrid work. Now, landlords are competing to see which trophy office spaces can command the highest rents in the market’s history. However, not all owners can achieve the rents secured by Soloviev and Related’s Jeff Blau. The market remains bifurcated, driven by tenant flight-to-quality, leaving questions for owners of Class B and Class C space. Still, average asking rents in Manhattan are rising and availability is falling, potentially creating more opportunities for eye-opening deals in the near future.
In other real estate news this week, Douglas Elliman issued a cease-and-desist letter to Ryan Serhant over veiled comments about former chairman Howard Lorber. Elliman’s general counsel stated that Serhant’s account of a meeting was inaccurate and misleading, clarifying that Serhant initiated the meeting to present a business proposal rather than being recruited. The dispute follows renewed scrutiny over Elliman’s corporate culture in light of past controversies involving its former leadership.
Tishman Speyer and landowner Cooper Union finalized a 150-year ground lease to revitalize the Chrysler Building, supported by a $235 million investment. Planned upgrades include refreshed arcade and 61st-floor amenities, facade restoration, and ready-to-occupy office suite designs. Tishman previously owned the tower before selling its stake in 2019, but stepped back in after prior leaseholder RFR’s ground lease was terminated in court.
Investors Josh Gotlib and Meyer Orbach are suing Jona Rechnitz for an alleged campaign of defamatory comments. Rechnitz recently sent messages to regulators and others, accusing the investors of fraud. The lawsuit follows Floyd Mayweather dropping his separate legal claims against Rechnitz in September.
Finally, Toll Brothers purchased two properties at 126 10th Avenue and 456 West 18th Street for $45 million, expanding its Chelsea assemblage next to the development site formerly tied to Brandon Miller. The homebuilder’s high-rise condominium division, Toll Brothers City Living, plans to construct a 114-unit residential building designed by CookFox with amenities including a pool, sauna, and playroom. Sales for the new development are expected to launch in the spring of 2028.
