- Dentsu is seeking to sublease a glitzy new office space it leased late last year on Manhattan’s West Side.
- The move is the latest effort by a major corporate tenant to dispose of or downsize a recent office commitment.
- Tenants are grappling with the economic downturn brought by the pandemic and contemplating the future of the physical workplace.
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Dentsu International, a subsidiary of the Japan-based advertising and media firm Dentsu Inc, is dumping a large new office it leased late last year on Manhattan’s West Side, two real-estate executives familiar with the offering told Business Insider.
Dentsu had planned to consolidate employees from four Manhattan offices into 320,000 square feet it leased late last year at the Morgan North Post Office Building by 2023. Now, Dentsu is actively looking to sublease the space, the two sources said.
A spokeswoman for Dentsu would not confirm that the company was planning to scuttle the entirety of the space, but a spokeswoman for CBRE, the real estate services firm that is representing Dentsu in disposing of the space, stated that the planned consolidation was now off, suggesting at the very least that the location would be downsized and that the space, in total, could be on the chopping block.
“Dentsu is assessing their real estate footprint to be aligned with their people and business’s needs in our new normal,” the CBRE spokeswoman said in a statement. “With new opportunities for the future of work, they are exploring various workspace strategies including the optimization of their 950,000 square feet of office space across five locations in Manhattan.”
The decision is the latest instance of a major corporate tenant scaling back its office footprint at a moment when the future of the workplace has been thrown into question thanks to the coronavirus pandemic.
Earlier this week, Business Insider revealed that AT&T has expressed second thoughts about its subsidiary WarnerMedia’s huge Hudson Yards headquarters, initiating a review of the space that could result in it shedding hundreds of thousands of square feet there.
Meanwhile, real-estate executives say that publisher Conde Nast has signaled that it would like to downsize its roughly one million square foot headquarters at One World Trade Center in Lower Manhattan. The company, which is less than a decade into its 25 year lease for the space, has even begun to look at other, smaller office locations in the city in which to relocate, though it remains uncertain how it would deal with its large existing lease should it proceed with such a move.
The turnabouts show how once bullish decisions on office space have been unmoored by the pandemic, which has thrust the economy into a downturn, accelerated pre-existing business trends, and proven that workers can do their jobs remotely. The later, especially, has begun to prompt tenants to examine whether their post pandemic space needs will be slimmer.
One real-estate executive pointed at the recent leadership change at Dentsu, with Jacki Kelley taking control of its US operations, as a contributing factor in the about-face on its decision to take space in the Morgan North building. Kelley’s predecessor, Nick Brien, had made the decision to lease the Ninth Avenue location but stepped down from the firm soon after.
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