Manhattan Tenants Pay Top Office Rents for Midtown South
May 21, 2012
By: David M. Levitt

Most landlords offering prestige Manhattan office space hate to be pinned down on their asking rents...

... Office demand in New York is shifting from the glossy skyscrapers of Midtown preferred by banks to the quirkier mix of neighborhoods to its south that’s home to Chelsea warehouses, Soho galleries and the punky shops on St. Mark’s Place where Joey Ramone and Madonna refined their fashion sense. Technology, media and information firms that gravitate to the area took more Manhattan office space than financial companies this year for the first time, ...

Tech Hub

New York is the fastest-growing U.S. technology hub, according to a study released this month by the Center for an Urban Future. While information technology employment in the city grew by 29 percent since 2007, securities industries jobs fell 5.9 percent, the New York-based public-policy group said. ...

Buildings With ‘Character’

... In the Flatiron district, where people queue up daily for hamburgers at the Shake Shack in Madison Square Park, landlords CIM Group and Sapir Organization are asking as much as $80 a square foot for 296,000 square feet in the art-deco tower at 11 Madison Ave., ...

Pushing the Envelope

... Landlords can afford to push the envelope on rents because of a limited supply of space in the area, ...

Chelsea Market

... Property prices reflect the area’s rapid rise. Epic UK Ltd., a New York- and London-based real estate firm led by brothers Michael and Steven Elghanayan, bought the 155,000- square-foot office building at 148 Lafayette St. in Soho this month for about $132 million, or $850 a square foot. That was higher than the per-square-foot price paid in January for 530 Fifth Ave., a 26-story tower near Grand Central Terminal in Midtown, according to research firm Real Capital Analytics Inc. ...

Thrillist Expands

Rent increases in Soho are unsettling to Eric Ashman, chief financial officer of Thrillist Media Group, an Internet company that was born in the neighborhood in 2005. The owner of websites including thrillist.com, which targets young men with recommendations for stores, bars and restaurants, is seeking to expand beyond its offices at 568 Broadway. ...

Boom and Bust

Midtown South has had booms before, only to be followed by busts, starting with the late 1990s when it became known as Silicon Alley after an influx of Internet startups. Acres of offices were abandoned in 2002 and 2003 when capital dried up for the so-called dot-com companies. Later, the financial crisis sent the vacancy rate soaring to 10 percent at the end of 2009. ...

...Google is taking over space in the 3 million-square-foot building as leases expire, forcing some tenants to look elsewhere. Spotify Ltd., the London-based music streaming service, is among companies shopping for space, according to Greg Taubin, executive managing director at Studley Inc., a New York-based brokerage.

Many of the displaced tenants are considering lower Manhattan, where vacancies are higher, as an alternative to staying in Chelsea,...

More Conservative

While there’s always a chance of another bust in the Midtown South market, it shouldn’t be as massive as the previous ones, Taubin said.

“Many of the young tech companies are taking a more conservative approach to their real estate, as opposed to years past where it was spend, spend, spend,” he said in an e-mail. ...

Maki’s Design

Maki, a Pritzker Prize-winning architect, designed the 400,000-square-foot project as three glassy geometric forms. The plan for the 12-story tower, slated to be completed next year, allows for roof gardens on the fifth and top floors. Its $300 million price tag is funded through a $165 million construction loan from a syndicate of firms led by Bank of America Corp. (BAC) Cooper Union, the neighboring engineering school, owns the building site. ...

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