With millions of square feet in new office space being built at Hudson Yards and the World Trade Center complex, some market observers are warning of a supply glut. But Manhattan’s largest office landlord, SL Green Realty, is having none of that.
“The addition of new supply to Manhattan is a good thing,” the company’s CEO Marc Holliday said during an earnings call Thursday. He argued that office construction is a reflection of growing demand, rather than a precursor of falling rents.
SL Green estimates that new construction in Manhattan is adding 2.5 to 2.75 million square feet in new office inventory annually over the coming years, which Holliday called “modest.”
“The issue is not the inventory to me, it’s the job growth,” he said. As long as the city adds around 10,000 office-using jobs per year, he argued, the new supply will be absorbed. “I have no real concern that we won’t be able to maintain a high occupancy rate.”
Between 2010 and 2015, annual growth in the number of office-based jobs in New York City averaged 31,600, according to a July report by the City Planning Commission. Between the first quarters of 2010 and 2016, Manhattan’s office vacancy rate fell from 12.7 to 10 percent, according to JLL.
On Wednesday, SL Green announced that it had sold a 49 percent stake in a 19-story office building at 400 East 57th Street to asset manager BlackRock.