The Real Deal New York

Banks are following the money to Midtown South

Leasing spikes in subdistrict as financial firms look to be closer to clients
October 03, 2016 12:14PM

Rendering of 387 Park Avenue South (inset: Jake Elghanayan) (credit: TF Cornerstone)

Rendering of 387 Park Avenue South (inset: Jake Elghanayan) (credit: TF Cornerstone)

Financial firms have been increasingly inking office leases in Midtown South this year in order to be close to the technology tenants that dominate the trendy market.

So far this year, banking industry companies have leased 255,000 square feet in Midtown South compared to 170,750 square feet all of last year, according to Cushman & Wakefield data cited by Bloomberg.

Office leasing by financial firms spiked to 23.1 percent of all deals in the submarket during the third quarter, up from 10.3 percent during the previous three months.

Firms like Silicon Valley Bank, which signed a deal for 20,000 square feet at TF Cornerstone’s TRData LogoTINY 387 Park Avenue South in July, are making the move from more traditional banking areas in order to be close to those companies they do business with.

“There are synergies, both from being near clients and it’s a cool neighborhood,” said TF Cornerstone senior vice president Jake Elghanayan.

Silicon Valley Bank is leaving Stawski Partners’ 505 Fifth Avenue as it relocates near Madison Square Park.

“We’re happy with our space in Midtown — it’s on the corner of 42nd and Fifth, it overlooks the library and Bryant Park — but our location is not providing our business with any particular advantages,” said Silicon Valley’s New York market manager Melissa Stepanis. “We work with a vibrant group of entrepreneurs and investors involved in the technology space, and there’s just an energy that these types of clients bring, and they’re clustered in the Flatiron, Madison Square Park area.”

Before the recent spike, the financial industry took up no more than 6.7 percent of the space in Midtown South. But industry watchers don’t expect the Flatiron and Plaza districts to go all freaky Friday anytime soon.

“What you’re seeing is just a more diversified market,” said Mike Mathias, a leasing broker a Savills Studley. “The future of the world is everything is going to have a tech component. There’s a premium people are willing to pay to be there.” [Bloomberg]Rich Bockmann