Watch out, Midtown. Jersey City is coming for you.
The city, just a quick and sometimes painless PATH train ride away, is Midtown’s biggest threat outside Manhattan in terms of commercial leasing, Gregg Popkin, president of RFR Realty, said during a presentation Wednesday. Office space in Brooklyn and Queens has yet to pose a real threat, he said, whereas Jersey City’s tax breaks have managed to lure Manhattan-based TAMI tenants. Recent major tenants include Forbes and Charles Komar & Sons, both of which received significant tax incentives to jump ship.
“They’ve had a lot of momentum,” he said of Jersey City, after the presentation at The Cornell Club On East 44th Street. “I’d love to change that because we have a lot of space in Brooklyn.”
Most of RFR’s office portfolio, which includes the Seagram building at 375 Park Avenue, is located in Manhattan, but the company is part of a team behind the Dumbo Heights complex, which will be home to WeWork, Etsy and others.
During his presentation at a B’nai B’rith Real Estate luncheon, Popkin said that “there’s trouble on the horizon” for Midtown’s commercial space, which is projected — according to various market reports — to hit a vacancy rate of 14 percent by 2019. One of the biggest threats to the leasing market in Midtown is its aging Class A office stock, which can’t compete with the glossy new buildings rising downtown and on the far West Side without new construction. Otherwise, as large spaces free up along Sixth Avenue — due to expiring leases and flight south and west — there aren’t enough tenants willing to move in.
Still, Popkin said he remains relatively optimistic about the future of Midtown in the long run. He partially pins his hopes on the whims of millennials, a group he expects will want to work and/or lease space in an older building.
“I think there’s still a lot of air in Midtown,” he said. “We’re just going to have to wait it out.”