The surge of office demand from New York’s technology, media and fashion companies is rapidly depleting the supply of affordable space in the city, especially in lower Manhattan, according to brokerage Studley Inc.
Downtown had 4.3 million square feet (399,000 square meters) of available Class B offices at the end of last month, 45 percent less than in 2011, Studley said in a report posted on its website today. The market’s lower rents are being taken advantage of by a wide range of cost-conscious tenants, including engineers and architects, advertising, schools and health care, Studley executives said.
While lower Manhattan’s smaller and older office buildings are filling up, the area’s supply of the highest-quality, most-expensive space has been growing, with the opening of new skyscrapers at the World Trade Center site. As the downtown market gets tighter, tenants are going to have to reach deeper into their pockets for some of that real estate, said Heidi Learner , Studley’s chief economist.
“The early-bird tenants have largely taken the best stock” of Class B and C offices, she said in an interview. Latecomers “are going to be forced to go into a little higher-quality space and pay up for it, while realizing that what they’re paying is still significantly less than what they’d be paying in either Midtown or midtown south.”
Downtown has about 8.7 million square feet of unrented Class A space, including 4.4 million square feet added in the three years through March, according to Studley. That includes offices in the new 4 World Trade Center and the almost-completed 1 World Trade Center, the Western Hemisphere’s tallest building. The market has a total of 95 million square feet of offices...NYC’s Most Affordable Offices Being Depleted, Broker Says
Related StoriesA Fashion Trend: Bigger Showrooms and Smaller Offices
Oil prices help predict office rents