Class B, C office space to be fully occupied by 2018: report

TRD New York /
Jan.January 03, 2014 08:13 AM

The city’s stock of Class B and Class C office space – space in older and cheaper office buildings that are favored by the technology, media and advertising sectors as well as startups – will be totally occupied by 2018, according to a new report from the city’s Economic Development Corporation. And by 2025, there will be a 6.3 million-square-foot shortage of this space.

The shortage could mean that startups could be hard-pressed to find affordable space. “As office use changes in New York, it’s important to ensure affordable and flexible office space for small, medium and large companies,” Kyle Kimball, the president of the development corporation, told the New York Daily News.

As emerging industries such as technology and media usurp the legal, real estate and financial industries that have typically been Manhattan’s largest tenants, the problem will become even more pressing, according to the newspaper. Indeed, the traditional industries that favor Class A space currently account for only 32 percent of the city’s economy, down from 53 percent in 2002, according to the News. Meanwhile, technology and media firms now account for 25 percent of the economy, a jump from nine percent a decade ago. They’re having a major impact on the leasing front, too- TAMI (technology, advertising, media, and information) tenants accounted for over a quarter of the top ten leasing deals in the second quarter of 2013, as The Real Deal reported.

Developers often shy away from building Class B and Class C buildings, according to the newspaper, because the rents – typically below $40 per square foot – don’t allow them to cover their construction costs. [NYDN]Hiten Samtani


Related Articles

arrow_forward_ios
Economic Development Corporation CEO James Patchett (Getty; iStock)

EDC’s $58M in Times Square rent mostly sunk into ferries

EDC’s $58M in Times Square rent mostly sunk into ferries
With many tech companies open to long-term remote work for their employees, questions are being asked about how that will impact the office and residential markets in hubs of tech talent. (iStock)

TRD Insights: What #WFH could mean for office and resi costs in tech hubs

TRD Insights: What #WFH could mean for office and resi costs in tech hubs
An illustration of Vornado's Steven Roth and Facebook's Mark Zuckerberg

Revenge of the hoodies: Big Tech may be breaking up with Big Office for good

Revenge of the hoodies: Big Tech may be breaking up with Big Office for good
Congresswoman Nydia Velázquez, Congressman Jerry Nadler and Council Member Carlos Menchaca (Credit: Getty Images, Google Maps)

Pols pounce as city caves in on Sunset Park property

Pols pounce as city caves in on Sunset Park property
Liberty View Plaza at 850 3rd Avenue and Marvin Schein (inset) (Photo by Axel Dupeux)

City lets Salmar bring office tenants to Brooklyn industrial property

City lets Salmar bring office tenants to Brooklyn industrial property
Alexandria Ocasio-Cortez and Sunnyside Yard (Credit: Getty Images, iStock, and SunnySideYard)

Progressives opposing Queens development target AOC

Progressives opposing Queens development target AOC
Lights, camera, development: City issues RFP for film studio in Sunset Park

Lights, camera, development: City issues RFP for film studio in Sunset Park

Lights, camera, development: City issues RFP for film studio in Sunset Park
Marisa Lago and East Harlem (Photo Credit: NYC.gov and iStock)

EDC has spent half of its $700M rezoning fund money on just four neighborhoods

EDC has spent half of its $700M rezoning fund money on just four neighborhoods
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...