As businesses flock to new high-rises in of-the-moment New York City neighborhoods, older offices in more traditional business districts appear to be taking a hit.
In the last few months, rents in some of those types of buildings have been trimmed, unusual in an industry that is loath to cut prices, especially when other economic indicators are generally sound.
Throughout the industry, there is a growing sense that the office market might be overbuilt.
“The tide is starting to turn away from a landlord-driven market to a tenant-driven market,” said Heidi Learner, chief economist with the commercial real estate firm Savills Studley, which specializes in tenant representation. “It’s not necessarily a signal of desperation. But it is a signal there’s a lot of supply out there.”
Stepped-up marketing efforts on behalf of those buildings, involving gifts to brokers beyond what is usually offered, are another sign that some properties may be struggling.
If there is a newfound softness in the office-leasing market, it appears concentrated in Midtown, whose mid-20th-century towers were for decades the place to be for law firms, banks and publishing houses. That is gradually changing.
Asking rents at the top buildings in Midtown dropped to about $87 a square foot in the fourth quarter last year from $91 in the third quarter, according to a Savills Studley market report. It was the largest decline among Manhattan office submarkets...Midtown Landlords Trim Rents as Corporate Tenants Flee to Trendier Addresses
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National Office Sector Report (Q4 2015)