CRE Trends: Space Users Negotiate an Evolving Market

Space-use strategies, and the way they impact productivity and recruiting, continue to evolve. While projects that have been announced promise to bring many millions of square feet of commercial office space to the market over the next five to 10 years, available top quality space remains a scarce commodity.

Rents throughout the city, but particularly in Midtown, have risen as a result, causing some lower-margin businesses such as publishing, media and advertising to rethink their location. Many businesses in these sectors have begun moving to Midtown South and to lower Manhattan, a trend that is supported by a demographic shift within the city that has seen more of the creative classes move to Brooklyn, providing an easier commute for many. Google’s lease of 500,000 sf at 111 Eighth Ave. is a prime example of this trend.Leading national and global corporations are willing to compete for top Midtown space at record rents as the ever-growing trend toward globalization has made a New York City presence more critical.

Also, companies allocate a significant portion of their budgets to the recruitment and retention of top talent, and they recognize that the quality of office space is a leading factor in the decision-making of top talent. Buildings with the combination of quality, location and access to transportation have the greatest allure for those professionals with numerous employment options.

Meanwhile, many former Midtown tenants are assessing lower-cost real estate offerings that cannot compete with Midtown in all ways, but which offer other benefits. These may include a more diverse neighborhood character than that of Midtown.

Real estate’s role in productivity and the war for talent has evolved over recent years. CoreNet’s New York City chapter has recognized that the changing role of real estate affects corporate strategies and expands the number of professionals involved in the decision-making process of the typical corporate real estate executive.

The chapter recently covered increased productivity strategies and workplace solutions in its luncheon learning series. Human resources and IT groups work closely with the corporate real estate executive to determine the most successful environments to support productivity. The chapter also engaged real estate professionals at an end-of-January luncheon on real estate’s role in recruiting and retaining talent.

As we look to the future of the commercial real estate market in New York City, understanding the evolution of the corporate real estate executive’s role is critical. An organization such as CoreNet is positioned to recognize trends and offer strategic solutions through shared knowledge.

CoreNet’s New York City chapter supports industry members by recognizing topics and trends that are emerging as well as current which affect decisions today and future planning. As New York City continues to grow by adding more square footage in non-traditional locations, the commercial real estate industry must react by recognizing the trends and remaining proactive.

Dale Schlather is vice president of the NYC Chapter of CoreNet Global and an executive vice president with Cushman & Wakefield. For information about the chapter’s educational programs and events, click here.

The views expressed in this article are those of CoreNet Global and not Real Estate Media or its publications.