Renovations, conversions and demolitions have played a major role in an 11 percent drop in more affordable Class B office space in Manhattan over the past 19 years, according to Jones Lang LaSalle data.
Firms are increasingly limited to outer-borough neighborhoods such as Downtown Brooklyn or Long Island City in Queens for Class B office space — a pillar of the economy as it is often rented by start-ups and smaller companies just getting their bearings. Downtown Manhattan saw the largest decline – by 30 percent – in Class B stock in the borough since 1995. The media and advertising sectors also tend to favor Class B properties.
“Buildings that were converted didn’t warrant office reinvestment,” John Wheeler of Jones Lang LaSalle told the Wall Street Journal. “They were really a drag on the market overall because they could only compete on the basis of price.” As a result, they were often demolished so that Class A space could but built in their stead.
Or to residential, when possible. Insurance corporation American International Group’s former headquarters on Pine Street, for example, is in the process of being converted to condominiums in a $550 million project.