KPMG Moving Headquarters To Manhattan West In Huge Consolidation
Add consulting giant KPMG to the list of huge companies that are vastly shrinking their office space as they move to a gleaming new building.
The Big Four professional services firm is moving its headquarters to Brookfield's Two Manhattan West, a 1.9M SF skyscraper under development in the Hudson Yards section of Midtown.
The lease is for around 450K SF, which is the largest in New York City this year, according to a Brookfield spokesperson. KPMG expects to move around 2025 in a consolidation of three Manhattan offices: its headquarters at 345 Park Ave. and large offices at 560 Lexington Ave. and 1350 Sixth Ave.
“KPMG has been based in New York since our inception on August 2, 1897, and we are proud to show our continuing commitment to this great city with our exciting new headquarters in Two Manhattan West in the vibrant Manhattan West neighborhood,” KPMG U.S. Chair Paul Knopp said in a statement. “As we celebrate our 125th anniversary and think about our firm’s future, this is an incredible opportunity to bring our people together in a custom-designed office space that will showcase our firm’s commitment to culture, innovation, wellness and sustainability.”
The deal marks a 40% reduction in office space for the company, The Wall Street Journal reports. Knopp told the WSJ that when the company first started looking for a new headquarters in 2018, KPMG had not aimed to shrink its space. But the reduction from roughly 800K SF to 450K SF cements the company's permanent shift to a hybrid work arrangement.
While KPMG plans to hire more people, it said it is saving on real estate expenses in the city — although the average asking rent in the Hudson Yards submarket was over $100 per SF in the second quarter, far higher than the average in the neighborhoods it is departing, according to CBRE.
Shrinking and relocating is an emerging trend in an increasingly active New York office market, especially when it comes to Two Manhattan West.
In June, Brookfield signed law firm Clifford Chance to a 144K SF lease at the building. The firm is relocating its office from Paramount Group's 31 West 52nd St., where it signed a 380K SF sublease with Deutsche Bank in 2003 that runs until May 2024. Cravath Swaine & Moore signed on in 2019 to anchor the tower with a 482K SF deal, a downsizing from the 617K SF the firm leases at One Worldwide Plaza.
Two Manhattan West is expected to open early next year after breaking ground in Q2 2019. KPMG's deal brings the building to 56% pre-leased, according to Brookfield's spokesperson.
The final 930K SF or so in the tower represent essentially the last availability in the Manhattan West megaproject: the 2.1M SF One Manhattan West is 99% leased, 1.6M SF Five Manhattan West is 100% leased and the 240K SF of retail across the project is 98% leased, according to Brookfield.
