NEW YORK CITY—As new office space construction has cropped up in surprising places around town—such as the Far West Side and Lower Manhattan—the city's typically older building stock is fighting to compete, according to JLL's latest Hedge Fund Report.
Given that the average age of commercial office product in Manhattan is 54 years, new construction has become increasingly attractive to tenants, notes report author Cynthia Wasserberger, managing director.
As the majority of new construction is not in Midtown, tenants are becoming “geographically agnostic, challenging the status quo,” she says in the research.
Underscoring the point, JLL asserts, newly constructed buildings that were initially regarded as being “off the beaten path”—such as 51 Astor Place, 837 Washington St., 10 Hudson Yards, and 610 Broadway—are fully leased. Further, the shift to the Far West side from Midtown locations has resulted in several significant transactions, such as Boston Consulting Group, L'Oréal, Skadden Arps and Point72.
This trend has continued, with new construction in the Hudson Yards and Manhattan West developments drawing tenants from the more traditional Midtown submarkets. In total, the research declares, nearly 91% of tenants relocating to Hudson Yards are coming from Midtown.
Squarely stated, with 6.2 million square feet of office space under construction in Manhattan, 1.7 million square feet already completed, and many new development projects that have not yet broken ground, there is concern over how older Midtown buildings will compete with this newer product, Wasserberger states in her findings.
Among recent transactions illustrating the point, at 55 Hudson Yards, Milbank, Tweed, Hadley & McCloy leased about 250,000 square feet and is set to relocate from 28 Liberty St., in a rare Downtown-to-Midtown move. Point72 leased roughly 175,000 square feet and will relocate from 330 Madison Ave. and 510 Madison Ave.
MarketAxess leased 83,000 and will relocate from 299 Park Ave.; DNB ASA committed to roughly 44,000 square feet at 30 Hudson Yards, relocating from 200 Park Ave; Citadel will anchor about 200,000 square feet at 425 Park Ave. in a relocation from 601 Lexington Ave. and Schroders leased around 73,000 square feet at 7 Bryant Park, relocating from 875 Third Ave.
Meanwhile, in Midtown South, Alibaba leased 33,000 square feet to establish its first NYC office and, in Lower Manhattan, GroupM leased 516,000 square feet at 3 World Trade Center and will relocate from 498 Seventh Ave. and 825 Seventh Ave.
Given that the average age of commercial office product in Manhattan is 54 years, new construction has become increasingly attractive to tenants, notes report author Cynthia Wasserberger, managing director.
As the majority of new construction is not in Midtown, tenants are becoming “geographically agnostic, challenging the status quo,” she says in the research.
Underscoring the point, JLL asserts, newly constructed buildings that were initially regarded as being “off the beaten path”—such as 51 Astor Place, 837 Washington St., 10 Hudson Yards, and 610 Broadway—are fully leased. Further, the shift to the Far West side from Midtown locations has resulted in several significant transactions, such as
This trend has continued, with new construction in the Hudson Yards and Manhattan West developments drawing tenants from the more traditional Midtown submarkets. In total, the research declares, nearly 91% of tenants relocating to Hudson Yards are coming from Midtown.
Squarely stated, with 6.2 million square feet of office space under construction in Manhattan, 1.7 million square feet already completed, and many new development projects that have not yet broken ground, there is concern over how older Midtown buildings will compete with this newer product, Wasserberger states in her findings.
Among recent transactions illustrating the point, at 55 Hudson Yards,
MarketAxess leased 83,000 and will relocate from 299 Park Ave.; DNB ASA committed to roughly 44,000 square feet at 30 Hudson Yards, relocating from 200 Park Ave; Citadel will anchor about 200,000 square feet at 425 Park Ave. in a relocation from 601 Lexington Ave. and Schroders leased around 73,000 square feet at 7 Bryant Park, relocating from 875 Third Ave.
Meanwhile, in Midtown South, Alibaba leased 33,000 square feet to establish its first NYC office and, in Lower Manhattan, GroupM leased 516,000 square feet at 3 World Trade Center and will relocate from 498 Seventh Ave. and 825 Seventh Ave.
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