NY Developers Dish on Future of Offices at TRD Roundtable

From artificial intelligence to flight-to-quality to residential conversions, there’s no shortage of intriguing storylines in today’s Manhattan office market. Developers and landlords had plenty to say about it at The Real Deal roundtable event last week.

The division between top-quality spaces and those that fail to stack up was a leading topic with the current landscape being shaped by a bifurcated market of winners and losers.

“These are extraordinarily good times,” Cushman & Wakefield global brokerage chair Bruce Mosler said of the office market writ large. “When you look at Class A invested and new development, we’re achieving record rents.”

Outside of the return-to-office movement, one major market driver Mosler isolated was the rise of artificial intelligence tenants. Fisher Brothers’ Ken Fisher noted the marriage between AI’s data requirements and landlords updating their building management systems, though he had a word of caution.

“I think you’ll see a lot more power requirement from the AI companies,” the Fisher Brothers partner said, adding that there’s a lot about the sector that’s yet to come.

While amenities are an important part of any Class A office development, there’s more to ownership than flashy bells and whistles — namely, how to operate the buildings, too.

“Within this concept of flight to quality, I think the shift that we’re going to start to see is flight to experience,” Sage Realty CEO Jonathan Iger said.

Still, it’s a good time for tenants.

“I could tell you that this is the best time to be a tenant that I can ever remember in the 47 years we’ve been here,” Fisher said.

For those less interested in trying to hack it in the office sector, there’s always a residential conversion option. It’s something Metro Loft’s Nathan Berman has been pursuing relentlessly over the years, particularly since the pandemic.

“We need 60-, 70-, 80,000 units a year just to fill the existing demand,” Berman stated. There’s a long way for the office-to-residential conversion sector to go to satisfy the market, in Berman’s eyes.

One conversion that’s caught a lot of attention is the Flatiron Building, which has already begun inking major contracts. There could be more in the works as the high-end trophy condo market plugs along, according to GFP Real Estate co-CEO Brian Steinwurtzel.

“We’ve been focused on very large-scale projects — typically equity checks that are $200 million or more — because we feel like there’s a niche in that market where there aren’t a lot of players that are able to play at that level,” Steinwurtzel said.

Panelists also had positive things to say about the new administration and Mayor Zohran Mamdani’s quest to improve affordability, which could help attract top talent to the city.

Check out the full roundtable conversation above. Thank you to our sponsor, Quality Building Services, for making this event possible.