Universal Music Group is moving its headquarters to the PENN 2 building in Manhattan, a shift that will provide the Dutch-American company with expanded production facilities to advance its projects. The 22-year lease grants UMG exclusive use of floors four through seven in the 1.62 million-square-foot building, including the newly developed 430-foot-wide Bustle area, which stretches from 31st to 33rd Street along Seventh Avenue in the Penn District following a $750 million renovation.
The area includes 88,000 square feet of double-height office space. In its first-quarter Manhattan market office report, Colliers stated that UMG's deal at PENN 2 encompassed a total of 336,000 square feet.
"PENN 2 will serve as an ideal nexus for our employees, artists, and songwriters," Boyd Muir, UMG’s chief operating officer, said in a statement.
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"Beyond office space, PENN 2 will house music studios and retail spaces, featuring a range of artist merchandise and exclusive products. We look forward to working with the team at Vornado as we work towards a 2027 move-in date.”
Currently, UMG's New York office is located at 1755 Broadway, near Columbus Circle and Central Park.
Some other improvements in the PENN 2 redevelopment include a glass curtain wall, a triple-height lobby, rooftop space, event space, outdoor green spaces, and retail components.
In addition to UMG, PENN 2 serves as the headquarters for Major League Soccer and Madison Square Garden.
In a first-quarter earnings call, PENN 2 landlord Vornado Realty Trust executives said that they expect both lease-ups at the building and general retail vacancies to help the company alone generate NOI of $125 million in 2025.
That came after Vornado reported that its New York occupancy dropped to 84.4 percent in the first quarter, compared to 88.8 percent in the previous three months, as a result of PENN 2 being entirely placed in service, according to the REIT. However, its current forecast is calling for a recovery, estimating that its New York occupancy will reach the "low 90s" over the next year or so, said Vornado's President and CEO, Michael Franco.
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