Side streets are the new main streets in NYC office market

TAMI tenant appetites pushing up demand, rents for prewar buildings

New York /
Dec.December 08, 2015 06:30 PM

There’s been a shift in the city’s commercial real estate market in recent years, and it’s been a boost for landlords at side-street buildings — while simultaneously a bane for those who own office buildings on the city’s main drags.

Much-discussed TAMI tenants, including tech startups and media companies, that are increasingly driving the city’s office market are moving toward prewar buildings, and its meant some side-street Flatiron District buildings are garnering higher rents than larger, more available Penn Plaza properties.

It’s a problem for landlords like Adams & Co., which poured money into its building at 463 Seventh Avenue Near West 35th Street – creating a new lobby, adding a new cooling tower, upgrading elevators and buying new operable windows, according to the New York Post.

But the company can’t move a large, 95,000-square-foot sublease on the building’s 16th through 20th floors – including spaces ranging from 16,750 suqare feet to 21,750 square feet – despite being able to cut a deal in the mid-to-high-$40s per square foot.

Not only has the office leasing market been slow north of 28th Street, according to Adams & Co. principal David Levy, but non-fashion buildings in the Flatiron District are seeing rents “they never dreamed of” – in the $60s per square foot even for side-street buildings.

The Chelsea and Flatiron District market has boomed over the past few years, and this year saw the Kaufman Organization go on a ground-leasing spree in the area – acquiring the long-term leases on several former Ring portfolio buildings from Gary Barnett’s Extell Development, as The Real Deal reported.

Rents at those buildings – which Extell recently sold to Edison Properties, as The Real Deal also reported – now run in the mid-$60s to mid-$70s. [NYP]Rey Mashayekhi


Related Articles

arrow_forward_ios
About 17.3 percent of Manhattan office space is available for lease, the most in decades. (iStock)
Manhattan office market’s 25% drop is ominous sign for landlords
Manhattan office market’s 25% drop is ominous sign for landlords
Douglas Durst with 1133 Avenue of the Americas (left) and 114 West 47th Street (Google Maps, Getty)
Durst refinances two Midtown buildings with $1.1B CMBS loan
Durst refinances two Midtown buildings with $1.1B CMBS loan
Rudin Management CEO Bill Rudin and 3 Times Square (Getty, FXCollaborative)
Rudin taps Cushman to market 3 Times Square, plans makeover
Rudin taps Cushman to market 3 Times Square, plans makeover
From left: Vornado Realty Trust’s 11 Penn Plaza and Apple’s Tim Cook, The Farley Post Office building and Facebook’s Mark Zuckerberg, Durst Organization’s One Five One and ByteDance CEO Zhang Yiming (Getty, VNO, SOM, Durst)
Big Tech firms led office leasing in 2020
Big Tech firms led office leasing in 2020
345 Park Avenue and 787 Eleventh Avenue (Photos via Google Maps and Rafael Viñoly)
Manhattan office availability hits all-time high in Q1
Manhattan office availability hits all-time high in Q1
315 West 35th Street with Isaac Chetrit and DJ Dashti (Google Maps, Linkedin, iStock)
Chetrit to open flex-office location near Penn Station
Chetrit to open flex-office location near Penn Station
From left: Nelson Mills of Columbia Property Trust, Gavriel Kahane of Arkhouse, Terminal Warehouse in Chelsea and 229 West 43rd Street (Photos via Columbia Property Trust, IFEB, Terminal Warehouse, Google Maps)
Investor group with Sapir Org ties makes $2.4B bid for Columbia Property Trust
Investor group with Sapir Org ties makes $2.4B bid for Columbia Property Trust
About 45 percent of companies would bring employees back to offices by September. (iStock)
Nearly half of NYC workers won’t return to offices until September
Nearly half of NYC workers won’t return to offices until September
arrow_forward_ios

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

Loading...