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Facebook scored a $100 million break on its blockbuster NYC office deal, and it could mark the start of a wave of discounts as vacancies soar

Facebook scored a $100 million break on its blockbuster NYC office deal, and it could mark the start of a wave of discounts as vacancies soar

Facebook agreed to pay $109 per square foot in rent for the Farley Building space, a rate that escalates by $10 per square foot every five years in the 15-year transaction.
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Facebook secured a 9% discount on its blockbuster office lease at the Farley Building on Manhattan's West Side, according to several sources who had viewed the terms of the deal.




The discount could be emblematic of the kinds of sweeter economics that landlords will have to offer tenants to convince them to take space now.




Another office tenant, Raymond James, secured a clause in a recent lease it signed to revisit the economics of the deal in two years, allowing it to capture discounts if the market drops.




Cushman & Wakefield predicts the office market nationally is in for a severe decline, with 145 million square feet of space set to be added to the country's pool of vacant space by the end of next 2021.




Visit Business Insider's homepage for more stories.


Office landlords are lowering rents and sweetening leasing deals to convince tenants to take space amid the twin challenges of a pandemic and a recession touched off by the virus crisis, according to market experts and data reviewed by Business Insider. The concessions, which also include longer periods of free rent and more generous contributions to the costs of building out an office space to ready it for a tenant's occupancy, show the financial lengths landlords are having to resort to in order to convince office occupiers to commit to deals. Prominent among the recent examples is Facebook's blockbuster lease at the Farley Building on Manhattan's West Side, where the social media giant was able to secure a 9% discount on the deal, which began negotiations last year, before the Covid-19 epidemic and was completed last month.
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