A surge in new supply in Manhattan’s office market is starting to make a dent on rents, Boston Properties CEO Owen Thomas said during an earnings call Wednesday.
“We see availability in New York, it’s hard to push it below 10 percent and in an environment like that it’s hard to push rents – certainly above inflation,” Thomas said, although he added that he considers the office market healthy amid broad-based job growth. “I think the mix of industries is getting more diverse in a positive way.”
The real estate investment trust’s president Douglas Linde said that a growing number of landlords are offering tenants concessions in the form of buildouts and flexible lease start dates.
Boston Properties owns several Manhattan office towers, including the GM Building, and is currently developing an office building in the Brooklyn Navy Yard in partnership with Rudin Management and WeWork.
The company’s net income fell to $76.8 million in the third quarter, down from $181.4 million a year ago, which the company attributed in part to accelerated depreciation expenses on Its Office Building 601 Lexington Avenue.
On SL Green Realty’s earnings call last week, the company’s CEO Marc Holliday dismissed the suggestion that the surge in new supply through megadevelopments at Hudson Yards and the World Trade Center could push down rents, calling the projects a “good thing” for the market.