HR technology company Gusto has expanded its Manhattan office footprint to 76,000 square feet across Vornado Realty Trust's Penn 1 tower in Midtown, doubling its previous occupancy at the 2.5 million-square-foot property.
The expansion centers on a 13-year lease for 38,000 square feet on the 47th floor, paired with a five-year renewal of Gusto's existing space on the 52nd floor. The deal locks Gusto into Penn 1, located at 1 Pennsylvania Plaza, through a combination of medium and long-term commitments that reflect the company's confidence in its New York operations.
Vornado Realty Trust, one of the nation's largest office landlords, secured this renewal amid a competitive Midtown office market. Penn 1 sits in the heart of Manhattan's business district, commanding premium pricing for Class A space. The tower competes directly with other trophy office properties in the area, including other Vornado holdings and competitor-owned buildings like the Chrysler Building and MetLife Building.
Gusto specializes in payroll, HR, and benefits management software for small and mid-sized businesses. The company operates in a crowded market alongside ADP, Paychex, and Square Payroll. Its decision to expand rather than consolidate or relocate signals confidence in its business trajectory and underscores the continued value Midtown Manhattan holds for established tech firms seeking talent and client proximity.
For Vornado, the deal represents a significant win in a leasing environment where New York City office landlords face persistent headwinds. Remote work adoption, hybrid schedules, and tenant consolidations have pressured office occupancy and rents across Manhattan. Securing a major tenant like Gusto for 13 additional years provides revenue stability and demonstrates that quality properties with strong building amenities still attract premium tenants willing to commit long-term.
The lease economics remain undisclosed, though Penn 1's location and Class A status typically command rents in the $60 to $80 per-square-foot range depending on floor and finish. At 38,000 square feet on a 13-year lease, this deal could generate $150 million to $200 million in gross lease value for Vornado, assuming mid-market pricing.
Penn 1 houses other major tenants including financial services firms and professional services companies. The building underwent significant renovations in recent years, including upgrades to lobby amenities, conference centers, and technology infrastructure, positioning it competitively against newer Manhattan office stock.
Gusto's expansion reflects a broader pattern among scaling tech companies that maintain New York headquarters despite offering remote options. The company attracts top talent in engineering, sales, and operations from the broader metro area, justifying the real estate investment. For landlords like Vornado, these long-term commitments from growing tech firms provide ballast against tenant churn and shorter lease cycles that plague secondary office space.