Creative companies flock to Meatpacking District

Oct.October 15, 2007 10:47 AM

The meatpacking district in West Chelsea isn’t just a nightlife hot spot anymore. A few hours after the bleary-eyed partiers leave, the streets get busy with office workers preparing to clock in at some of the many creative companies setting up shop in the area.

Many advertising, media and other creative businesses have signed deals to move into the neighborhood, from the apparel maker Theory, which has leased an entire 60,00-square-foot building on Gansevoort Place, to Estee Lauder’s salon and hair-care subsidiary Bumble & Bumble, and the Food Network, a new tenant in the Chelsea Market.

Even financial services firms are getting on board: Alexander von Furstenberg, son of Diane von Furstenberg and stepson of Barry Diller, will move Arrow Investments, his private investment firm, to 408 West 14th St., between Ninth and Tenth Avenues. The company’s offices are currently in the MetLife building.

“This is the next frontier in office development,” said Douglas Grabiner, managing director of Newmark & Co., which represented the landlord in the Arrow Investments lease. “It’s a way for companies to show that they are forward-thinking and unique, not simply taking space in a fungible building.”

“It’s the cutting edge neighborhood for creative companies to be,” agreed Bruce Sinder, president of Sinvin Realty Corp., which focuses on Downtown office and retail space, and represented the landlord in the Theory transaction. In that deal, the retailer took an entire building and will use the ground floor for retail and the upper floors for a showroom andécorporate headquarters, Sinder said.

More established buildings are also benefitting from the neighborhood’s cachet.

111 Eighth Avenue, a 3-million-square-foot building that occupies an entire city block from Eighth to Ninth Avenues and 15th to 16th Streets-one-and-a-half times the size of the MetLife building – is about 95 percent occupied, says Brian Gell, an executive vice president with CB Richard Ellis, who represents the building along with senior associate Susan MacWilliams.

“We have transactions pending for 300,000 square feet for future space, when leases expire for older tenants-distributors and warehouses,” Gell says.

The building houses such tenants as BarnesandNoble.com, DoubleClick and Deutsch Advertising, which recently increased the amount of space it leases from 110,000 square feet to 130,000 square feet.

What’s driving it? The movement of many galleries from SoHo to Chelsea and the recent influx of trendy clubs and restaurants certainly helped, brokers say.

“Many companies are looking for an atmosphere that will excite and energize their people, both in terms of neighborhood and environment,” Gell says, referring to both the neighborhood and the aesthetic amenities associated with converted industrial buildings, from high ceilings to wide columns.

With many low-rise buildings and streets that are off the grid, Sinder says the meatpacking district has an almost European flavor. No one denies that Chelsea Market has also been a driving force, Grabiner says. The culinary cornucopia in the first floor of the multibuilding market is a destination, he says.

Put it all together and what you get is demand that outpaces supply and rents that outpace those in lower Manhattan and Midtown South. At 111 Eighth Avenue, rents are in the mid-$30s per sf, Gell says.

For the neighborhood as a whole, rents range from the mid-$20s to the mid-$30s, he says, up from the low to mid $20s five years ago, but still below their $40 peak during the dot-com boom, Gell says.

“It comes down to location, not economics,” Grabiner says.


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