BXP gets verdict from McDermott Will & Schulte for 343 Madison Ave.
Here’s a stat that should make every office bear pause: 343 Madison Avenue won’t open until 2029, yet it’s already 56% pre-leased. The latest deal — a 150,000-square-foot lease to Chicago law firm McDermott Will & Schulte — is another vote of confidence in BXP’s $2 billion new-construction bet. In an era of relentless “office is dead” headlines, the flight to brand-new, trophy office product keeps quietly winning. Let’s unpack what this lease tells you about where Manhattan office is really headed.
The Deal
Start with the facts:
- Tenant: McDermott Will & Schulte (a Chicago-based law firm)
- Landlord/Developer: BXP (Boston Properties)
- Size: ~150,000 square feet
- Floors: 31 through 37 of a 46-story tower
- Asking rent: just under $200 per square foot on the lower floors
- Building opening: 2029
- Pre-leased after this deal: 56%
A law firm committing to 150,000 feet across seven high floors of a building that won’t deliver for three years is the definition of conviction leasing. Tenants don’t make that kind of long-dated commitment unless they believe — in their location, in their headcount, and in the asset.
$200 a Foot, and They’re Signing
Let’s talk about that asking rent, because it’s the headline most people will miss.
Just under $200 per square foot — and that’s for the lower floors. In a supposedly soft office market, premier new product is commanding rents that would have seemed aggressive even before the pandemic. This is the clearest possible evidence of the bifurcation that now defines Manhattan office:
- Trophy and new-construction product is commanding record rents and strong pre-leasing.
- Commodity and aging Class B/C product is struggling with vacancy and concessions.
There is no single “office market” anymore. There’s the flight to quality, and there’s everything else. The 343 Madison print lands firmly in the winner’s column.
The Tenant Roster Tells the Story
McDermott isn’t the only marquee name committing. The building’s pre-leasing momentum is built on real institutional tenants:
- Starr (the investment/insurance organization) — 320,000 square feet total, having expanded from an original 275,000 sf, with its lease signed back in December.
- McDermott Will & Schulte — the new 150,000 sf deal.
And McDermott’s broader footprint reinforces the point: the firm is also expanding to an additional floor at SL Green’s 1 Vanderbilt Avenue next year. Law firms — among the most location-sensitive, prestige-driven office tenants — are expanding into the best buildings, not contracting. When white-shoe firms grow into trophy space, it’s a leading indicator for the premium segment.
BXP’s High-Stakes Bet
Now the developer’s side, because this is where the risk-reward gets interesting.
343 Madison is a $2 billion development. To fund it, BXP made some hard choices:
- It cut its dividend by 30% in September to free up capital.
- It’s targeting $50 million in quarterly savings.
- Its partner Norges Bank withdrew as a 45% stake holder the prior summer.
A 30% dividend cut and a departed institutional partner — and BXP still pushed forward on a $2 billion tower into the teeth of an “office is dead” narrative.
That takes conviction. And so far, the 56% pre-lease vindicates it. BXP read the market correctly: the demand isn’t gone, it’s concentrated — funneling into the newest, best-located, most amenitized buildings. The developer that builds the right product in the right spot still gets leased up, even when the broad market headlines are grim.
The Broader Market Signal
Zoom out, and a couple of comps frame just how active the premium segment is:
- Cleary Gottlieb signed the largest May lease — a 475,000-square-foot deal at the Financial District’s 1 Liberty Plaza.
- McDermott’s expansion at 1 Vanderbilt continues the trophy-tenant migration.
Big law and big finance are making big, long-dated commitments to premium Manhattan space. That’s not the behavior of tenants who think the office is obsolete. That’s the behavior of firms competing to attract talent back with the best possible workplace.
What CRE Pros Should Take Away
Here’s the actionable read for anyone in the office game:
- Bifurcation is the thesis. Underwrite trophy and commodity product as two completely different markets. They are.
- Pre-leasing de-risks development. BXP’s 56% before delivery is the proof that the right product finds tenants early.
- Rents are holding at the top. Sub-$200/sf asking — and clearing — tells you the premium ceiling is intact.
- Conviction cuts both ways. BXP cut its dividend and lost a partner but stayed the course. Developers willing to make hard capital choices for the right asset are being rewarded.
The lesson isn’t “office is back.” The lesson is “the best office is back, and the rest is on its own.” Capital and tenants are both voting with their feet — toward quality.
The Bottom Line
343 Madison Avenue is the cleanest case study in Manhattan office right now: a $2 billion new-construction tower, 56% pre-leased three years before it opens, anchored by $200-per-foot trophy demand from the likes of Starr and McDermott. It’s proof that the flight to quality is not a slogan — it’s the operating reality of the post-pandemic office market.
Build the right product, in the right place, and the tenants still come. That’s the whole story.
Are you underwriting Manhattan office as one market or two — and where are you placing your bets? If you broker, own, or finance office, I want your take in the comments. Follow along as I track the trophy-office leasing wave deal by deal.
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