In an ever-more-dire office leasing market, landlords have re-tooled their strategy, Crain’s reports. Instead of pooling smaller spaces together to create a space appealing to a large, blue-chip tenant, landlords are now cutting up spaces to court smaller tenants, as a way of hedging their bets.
For instance, at the Graybar Building at 420 Lexington Avenue, SL Green is dividing 10,000 to 20,000 square-foot spaces into 2,500- to 6,000-square-foot units, and building out the spaces for free, Crain’s said.
“For the small tenant, that takes inconvenience and capital cost out of the equation,” Steven Durels, executive vice president and director of leasing at SL Green, told Crain’s. “[The shift] is driven by small tenants being the biggest force in the market.”
And these days, the risky tenants might also be the large ones that would traditionally anchor an office building — a large bank or insurance firm.
“I would hate to be reliant on a business plan for a building that is dependent on securing a large lease from a Merrill Lynch or a Bank of America,” Nicholas Bienstock, a managing partner at private equity shop Savanna, told the magazine. [Crain’s] — Guelda Voien