As building owners scramble and compete to attract and keep top tenants, money is pouring into old and new office buildings.
New buildings, says Jeremy Moss of Silverstein Properties, are a “tool” for recruitment. “I feel like the whole city is running at 150 percent,” declares Moss of the local leasing activity. Moss oversees leasing for Silverstein’s Three, Four and Seven World Trade Center, along with the future Two World Trade, among other properties.
A decade ago, many in the industry questioned the need for new office construction. Despite that, over 25 million square feet has been built in the past 10 years — and most of it is leased. “The demand validates the work,” says Moss.
“What makes us feel spectacular is that we’ve leased 9 million square feet of office space at the same time Related leased 11 million square feet [at Hudson Yards] and at same time as Brookfield leased 5 million square feet [at Manhattan West],” says Larry Silverstein, head of his eponymous company. “These are three chunks of real estate and they were leased simultaneously.”
Silverstein continues, “All the buildings are first class and the latest and the best — and at the end of the day, we [all] leased up. I don’t know any other city in the world that can support 25 million square feet of new, trophy-quality office buildings.”
All the new office towers provide tenant companies the opportunity to grow and keep workers happy while enjoying new infrastructure that can support more open and more collaborative spaces.
Even as smaller budding tech and media companies mature and grow, Eric Cagner of Newmark Knight Frank says, “They need a higher-quality building, more services, better light, better views and better infrastructure like telecom.”
That’s why the older Class A buildings are being forced to spend money to move forward, says Paul Amrich of CBRE.
“The trend for 2020 is continuing reinvestment by owners to make their product respond to the needs of tech companies, service, finance, education and health care,” says Bill Rudin, head of Rudin Management and REBNY’s chairman. “This is the broad diversified economy that the city has grown over the last decade.”
In Midtown, at 1177 Ave. of the Americas between West 45th and 46th streets, Silverstein created a full-floor amenity space with a lounge as well as fitness and yoga classes.
“Our focus is on hospitality, and that is another major shift in the New York office market,” Moss says. “It is focusing from the moment someone walks into the building until they walk out — and ensuring all their needs are met, from dining and food options to catering and concierges. Everybody is focused on it.”
Even historic buildings attract tenants if the aesthetics and mechanics are upgraded and they provide unique amenities. In the Financial District, Silverstein, for instance, has added $50 million in upgrades to The Equitable Building at 120 Broadway, including the thoughtful renovation of its arched lobby and its public arcade.
Silverstein also reopened the 40th-floor Bankers Club and rooftop. Closed in the past, it had previously hosted politicians and royalty, including Queen Elizabeth II and Winston Churchill.“You can step outside and eat lunch or have a cocktail on the garden terrace,” Moss says. “It’s a well-executed amenity and they provide delivery and catering to the tenants. It works so well and is such a unique space — and you get these incredible views of the skyline.”
120 Broadway has spaces for large and small tenants with pricing in the $60s and $70s per square foot.
“New buildings are a ‘tool’ for recruitment … I feel like the whole city is running at 150 percent.”
– Jeremy Moss, Silverstein Properties
Cagner describes downtown Manhattan as “a land of opportunity” compared to other markets. “Tenants priced out of Midtown South are seeking value and finding it downtown,” he explains.
According to Newmark Knight Frank, 11.1 million square feet was leased downtown last year.
The Financial District is “on fire,” agrees Robin Fisher, also of Newmark Knight Frank. “It’s inexpensive and creative, and landlords are catering to tenants with pre-builts.” It also has many subway lines plus easy commutes from both New Jersey and Brooklyn, she adds, noting, “It used to be a low-cost alternative.”
Cagner is working on the leasing of 100 William St. across from the Fulton Center transit hub with asking rents is in the mid-$50s per foot.
“We intend to add elements in line with what today’s tenant wants,” he notes. “The market feels healthy and inventory is tight and impacting the demand for downtown.”
Other notable leasing opportunities are in Vornado’s soon to be dramatically renovated Farley Building and One and Two Penn Plaza, as well as Tishman Speyer’s Morgan North and the new Spiral at 66 Hudson Boulevard.
But the largest redevelopment around Madison Square Park will be SL Green’s restacking and enlargement of One Madison Ave. at East 23rd Street that will begin after Credit Suisse exits.
With lots of glass, large floorplates and a roof deck, it is designed to attract tech companies.