Midtown offices grow through “space inflation”

TRD New York /
Mar.March 26, 2012 01:30 PM

Out of a sample of 50 office buildings in Midtown, over half have grown “significantly” over the past 20 years, while just one of them was actually physically expanded.

According to Crain’s, which cites data from a new Commercial Tenant Real Estate Representation report, 34 percent of the buildings expanded by 5 percent or more over the past 10 years. By expansion, the study means new building measurements issued by landlords, such as including hallway and lobby space in rentable square footage, which increases rent collections. The study refers to this as “space inflation,” and if applied to the rest of the Manhattan office market, Crain’s wrote, “that would translate a total annual rent hike for tenants of $775 million.”

As The Real Deal reported two weeks ago, this feature of the market, also called “loss factor,” makes some tenants’ blood boil, and has led to a lawsuit from a small tenant in Midtown’s Fisk Building.

“What tenants really focus on is the rent per square foot,” Marisa Manley, president of CTRR, told Crain’s. “Sometimes it is easier to increase the rentable square footage than it is to increase the rent.”

According to the CTRR study, 1140 Sixth Avenue, a 20-story office building located between 44th and 45th streets, grew 41 percent between 1990 and 2011. The only building to physically expand its size was 666 Third Avenue, the Chrysler East Building, where subcontractors were indicted last year for alleged collusion with Lehr Construction. [Crain’s]

Related Articles

(Image by Wolfgang & Hite via Dezeen)

Hudson Yards megadevelopment inspires a new line of sex toys

Cammeby's International Group founder Rubin Schron and, from top: 194-05 67th Avenue, 189-15 73rd Avenue and 64-05 186th Lane (Credit: Google Maps)

Ruby Schron lands $500M refi for sprawling Queens apartment portfolio

Wendy Silverstein (Credit: Getty Images)

Wendy Silverstein, co-head of WeWork’s real-estate fund, is out

Finger and Finger principal Kenneth Finger and landlord activist Jeff Hanley with Westchester (Credit: iStock)

Westchester group lobs its own constitutional challenge to New York’s rent law

Kings Plaza Shopping Center and JPMorgan's Jamie Dimon 

Macerich lands nearly $500M refi for Kings Plaza Shopping Center

WeWork's Artie Minson and Managed by Q's Dan Teran 

WeWork in talks to sell off Managed by Q to free up some cash

(Credit: iStock)

What you need to know about investing in healthcare real estate

Square Mile Capital's Craig Solomon and Hope Street Capital's Sha Dinour with renderings of 550 Clinton Avenue in Brooklyn (Credit: Getty Images and Morris Adjmi Architects)

Square Mile Capital provides $180M loan for Brooklyn tower