The 2010s will go down as a historic boom for Manhattan office development — one that’s not likely to be repeated in the decade ahead.
The borough added 28 new office buildings of significant size over the past 10 years, increasing Manhattan’s office space by about 44 million square feet, according to CBRE. That’s roughly double the amount added in the previous decade and four times as much as in the 1990s — a particularly inactive time for new office development.
But with megaprojects like Hudson Yards, Manhattan West and the World Trade Center wrapping up, it’s unlikely that such development will take place in the next decade, according to CBRE Tri-State CEO Mary Ann Tighe. She worked on some of the biggest leases in the last 10 years, including Conde Nast’s relocation to 1 World Trade Center and Coach’s move to 10 Hudson Yards.
Tighe caught up with The Real Deal this month to discuss the next development wave in Manhattan, how building amenities have gone too far and why WeWork was never “a growing company.”
Will we see as much office development in the next decade?
The beauty of New York real estate supply is that it doesn’t sneak up on you. You can credibly look at the next three years — and with a reasonable amount of certainty, the next five years — and know where the supply is coming from. And after Hudson Yards, Manhattan West, the World Trade Center, all of those are redeveloped. Guess what? You’re going to have to tear something down to build something anew. And by the way, that’s never happened in Manhattan.
That’s what JPMorgan’s doing.
They will be the first to demonstrate what I predict will be the future of development on the island of Manhattan. We got rid of parking lots a long time ago. I’m talking about basically, oh, I don’t know, pick a location from 125th Street to the Battery. I suspect we’ll see more development in Harlem than we have — east to west — because there are land sites there. And obviously very good mass transit access.
But in the sort of conventional office districts — meaning south of 59th Street, if you will — you’re going to have to tear something down.
Will we look back in the building amenities and say that was built in the 2010s?
I think that there’s no question that the hospitality sensibility is an important part of office development or redevelopment today or going forward. But I do think people have gone a bit too far. First of all, I have to say, we live in a city that is filled with amenities. All you have to do is walk out of a building and across the street in most, not at all, but at most locations.
How have today’s largest tenants grown over the past decade?
If someone had said to you 10 years ago, “Facebook is coming to New York and is going to be taking more than a million and a half square feet,” you’d say, “Who?” One of the reasons that we’ve had the kind of extraordinary decade we’ve had is because of the true diversification of the tenant base. But it’s also because we’ve seen growth of the companies who came here.
Have you ever seen a company like WeWork grow at such a rapid pace?
Co-working in 2010 occupied 1.8 million square feet in the city. Remember, co-working existed before WeWork. And today co-working occupies 15.3 million square feet. So that means it grew by 830 percent in a 10-year period.
I think it’s always a misnomer to think of WeWork as a growing company. They’ve rented the most space of any tenant in the city. That’s different from saying it’s a company that grew. I mean, what did WeWork do? They took space and put other companies in the space. So in many ways, WeWork is just a sublandlord.
I would say that what they did is reshape the small tenant market. It was not just WeWork, but WeWork led the way. All of the co-working universe changed the nature of space occupancy for people 10,000 square feet and smaller.