By Franklin Wallach, Colliers International
Manhattan is one the biggest cities in the world. It’s also the largest office market in the United States–packing nearly 525 million square feet of office space into more than 1,800 buildings from the southern end of Central Park down to the tip of Lower Manhattan.
And not only is Manhattan a large market, it is an old market. The average office building in Manhattan is 68 years old. Approximately 46% were built prior to World War II (aka “pre-war”) and 30% were built after World War II but before 1980 (aka “post-war”). Only 14% of the inventory was built between 1980-1999 (aka “post-1980”), and only one in 10 office buildings in Manhattan were built after 2000 (aka “post-2000”).
However, different pockets of the city have different make up of new and old buildings. Manhattan is broken up into three markets (Midtown, Midtown South and Downtown), which are then broken down into 18 smaller submarkets. And the relative age of those 18 submarkets (based on the weighted average of its office stock) varies widely.
More tenants are demanding the efficiencies offered by the newest office product while others – especially in the tech and media sectors – prefer the unique aesthetics and charm that come with pre-war office buildings. We at Colliers decided to break down the submarkets which have the largest percentage of their office inventory in the pre-war, post-war, post-1980 and post-2000 categories.
We will be able to see which of Manhattan’s 18 submarkets are the oldest, the newest and which ones fall somewhere in between.
In Midtown, the Grand Central submarket has the largest percentage of pre-war inventory at 37% totaling more than 21 MSF. This includes well known buildings such as the Chrysler Building (405 Lexington Avenue), Helmsley Building (230 Park Avenue) and Graybar Building (420 Lexington Avenue). With this high percentage of pre-war office product, it’s no surprise that the City recently approved the rezoning efforts for Midtown East to support the development of newer office product in the neighborhood.
In Lower Manhattan, City Hall has the largest percentage of pre-war product. Despite conversions of older office buildings in recent years to non-office use – such as the Emigrant Savings Bank Building on Chambers Street and the upper floors of the Woolworth Building at 233 Broadway – this smaller submarket of only 7 MSF is still, to this day, primarily defined by older office buildings. Approximately 67% of the City Hall submarket is pre-war totaling nearly 5 MSF and driven by such notable office buildings such as 225 Broadway and the office portion of the Woolworth Building.
But the Manhattan submarket with the highest overall percentage of pre-war product is Midtown South’s Chelsea submarket at 93% and totaling 39 MSF. Chelsea’s overwhelming supply of pre-war office product is fueled by massive (1 MSF+) office buildings originally used for industrial, shipping or manufacturing use that have been part of the neighborhood for decades such as 111 Eighth Avenue, the Starrett-Lehigh Building (601 West 26th Street) and the Chelsea Market Building (75 Ninth Avenue).
Despite more than 25 MSF of office space developed in the last decade, Manhattan’s newer office buildings make up a much smaller percentage of the markets. The largest percent of post-2000 office stock within Midtown is in the Times Square submarket at 18% and totaling 11 MSF. This is not a surprise, given the initiative to “clean up” Times Square beginning in the 1980s that eventually led to a slew of office development in the 1990s and 2000s, including more modern developments like One Bryant Park, 620 Eighth Avenue and 7 Times Square.
On the south end of the island, the World Trade Center (WTC) submarket has the highest percentage post-2000 inventory in Lower Manhattan (34%) totaling more than 12 MSF, due mainly to the rebuilding over the last 15 years of 7WTC, 4WTC, 3WTC and 1WTC as well as the development of the Goldman Sachs headquarters building at 200 West Street.
Although the WTC submarket has the largest total post-2000 inventory in Manhattan (12 MSF), the submarket with the largest overall percentage of post-2000 product is the Hudson Yards/ Manhattan West submarket in Midtown South at 67% and totaling just over 8 MSF.
Over the last four years, millions of square feet of office buildings have been developed that have completely reshaped this submarket including 1 Manhattan West, 10 Hudson Yards and 30 Hudson Yards. The post-2000 inventory in Hudson Yards/Manhattan West is set to double by 2023 with buildings scheduled for completion such as 50 Hudson Yards, 66 Hudson Boulevard and 2 Manhattan West.
Between pre-war and post-2000 lies the categories of post-war and post-1980. Midtown’s Plaza District can lay claim to having the highest percentage of its inventory in the post-war category at 57% and totaling nearly 49 MSF. Millions of square feet of skyscrapers were developed along Park Avenue, Madison Avenue and Fifth Avenue in the “Mad Men” era after World War II including notable buildings such as The General Motors Building (767 Fifth Avenue), 9 West 57th Street and 399 Park Avenue.
Downtown’s boutique Tribeca submarket (8 MSF) and the larger WTC submarket (37 MSF) both lead Manhattan with the highest percentage of their respective product in the post-1980 category (31% each). Tribeca’s nearly 3 MSF post-war inventory is the result of two buildings developed and today owned by Citigroup: 388 and 390 Greenwich Street. Meanwhile, the WTC’s nearly 12 MSF post-1980 inventory was largely caused by the development of the World Financial Center office complex (now known as Brookfield Place) that was built in the 1980s and 1990s.
Age is Just a Number
As you can see, the Manhattan office market’s pre-war, post-war, post-1980 and post-2000 office inventory is unevenly spread across the island. Some submarkets are virtually dominated by the newest product while others are defined by their oldest product. And others fall somewhere in between.
Fortunately, tenant demands vastly differ by industry and the age of a building alone does not determine tenant demand. We have seen numerous pre-war and post-war office buildings redefine themselves through significant upgrades and renovations in order to compete with newer construction – such as 75 Rockefeller Plaza, 1271 Avenue of the Americas and 285 Madison Avenue – or see success from being identified as an older building that appeals to tech and media tenants such as 350 Fifth Avenue, 75 Varick Street and 770 Broadway.
 Note: Manhattan office market inventory is based on all non-government owned commercial buildings with at least 25,000 SF office RSF.
Frank Wallach is Senior Managing Director of the Research Group for Colliers International Tri-State. For questions about the data in this article, please email Frank or call him at (212) 716-3603.