The Real Deal New York

Tech companies lose grip on leasing in Midtown South

Other industries are moving into the trendy neighborhood to compete for employees
July 03, 2017 07:49AM

from left: 61 Ninth Avenue and Aetna CEO Mark Bertolini (Credit: Vornado Realty Trust and Getty Images) and 413 West 14th Street

Aetna’s deal to lease 145,000 square feet in the Meatpacking District is just the latest sign that non-technology tenants are increasingly drawn to Midtown South.

Tech tenants accounted for just 13 percent of new leases in Midtown South during the first half of 2017, down from 35 percent the same time last year, according to figures from JLL cited by the Wall Street Journal. In the first half of 2015, tech’s share in the neighborhood was 48 percent.

While companies like Google and Facebook still have large presences in Midtown South, non-tech companies have realized that they’re competing for the same work force.

“We think it’s more than just wanting to hang with the cool kids,” JLL research director Tristan Ashby said. “These more traditional corporations have realized that they are competing for the same talent as Google and Facebook. The candidates they want to hire don’t commute to Grand Central.”

Earlier this year, the Bermuda-based insurance firm Argo Group signed a lease for 48,000 square feet at 413 West 14th Street, a redevelopment project in the Meatpacking District by Rockpoint Group, Highgate and the Meilman family.

“Argo was one that shocked the market,” said CBRE’s Paul Amrich, who is part of the leasing team at the building. “They were like, ‘Wait, insurance in the Meatpacking District?’ But we have seen more and more of that occurring.”

One thing experts said the numbers don’t show is space taken by tech firms in co-working facilities.

“They are successfully capturing many of the startups we have accommodated in recent years. I think the statistics are a little askew,” said ABS Partners Real Estate’s Jay Caseley.

TAMI tenants, meanwhile, are increasingly heading Downtown. [WSJ] – Rich Bockmann