I need my space: Is the office densification trend over?

“In some ways, the pendulum may have swung too far to one side”

TRD New York /
Jan.January 10, 2018 12:45 PM

From left: Cushman’s Kenneth McCarthy, Louis D’Avanzo and Richard Persichetti

Could the era of squeezing more and more workers into every square foot of office space be coming to an end?

“Densification” has been the word on the tips of dealmakers’ tongues in the office market in recent years as tenants switched from layouts focused on individual offices toward more open plans requiring less space.

But that trend may be reversing. Tenants that inked deals in new construction on the Far West Side last year took more space than they left behind, according to Cushman & Wakefield.

Companies leased 8.3 million square feet in Hudson Yards and Manhattan West, leaving behind about 7 million square feet, Cushman head of research Rich Persichetti said during the firm’s year-end market update Wednesday morning.

Asset manager BlackRock, for example, signed a lease last year for 850,000 square feet at the Related Companies, Oxford Properties Group and Mitsui Fudosan America’s 50 Hudson Yards. The company currently occupies 700,000 square feet in two buildings on Park Avenue and East 52nd Street in the Plaza District.

BlackRock pledged to add 700 new jobs on top of its current 2,700 employees over the next decade in exchange for $25 million in state tax credits attached to the deal.

Louis D’Avanzo, the managing principal for Cushman’s Midtown office, said that some companies have squeezed as many workers as they can into their offices, and are now finding a new normal.

“In some ways, the pendulum may have swung too far to one side of the open space, really dense [office],” he said. “I think there’s more data coming back that not all jobs and functions work well in a completely open, dense environment.”

Ken McCarthy, Cushman’s principal economist, said one reason for the switch toward more space could be the simple fact that the economy is growing and these companies are adding more jobs.

“I think it’s a little early but I think it’s a possibility that going forward we may see less [densification],” he said.

McCarthy said New York City added a net of 53,000 jobs in 2017, a year he called a “mixed bag” in terms of job growth.


Related Articles

arrow_forward_ios
250th Issue

The Real Deal celebrates 250 issues

From left: Publisher and founder Amir Korangy, Editor-in-chief Stuart Elliott and VP of Corporate Development Yoav Barilan

TRD’s founders share war stories from over the years

Neir’s Tavern (Credit: Google Maps)

City’s oldest bar, of “Goodfellas” fame, gets last-minute lifeline

Neir's Tavern (Credit: Google Maps)

Landlord to bar owner: You don’t have to go home but you can’t stay here

Fosun Property’s Bo Wei, Refinitiv’s David Craig and 28 Liberty Street (Credit: Getty Images, Google Maps)

Fintech firm signs on for massive lease at 28 Liberty

From left: 333 Johnson Avenue, 250 Livingston Street and 12 MetroTech Center (Credit: Google Maps)

City agencies dominated Brooklyn’s biggest office leases of 2019

Savannah's Christopher Schlank with One Court Square and Tishman Speyer's Rob Speyer with the JACX at 28-10 Queens Plaza South (Credit: Getty Images, One Court Square and CityRealty)

LIC dominated Queens office leases in 2019

Amazon CEO Jeff Bezos with 410 Tenth Avenue and 1251 Sixth Avenue with Mitsui Fudosan America’s John Westerfield (Credit: Google Maps, Getty Images, Wikipedia)

Amazon’s West Side deal tops list of Manhattan’s biggest December office leases

arrow_forward_ios
Loading...