Office Construction

Manhattan Office Tenants Paying a Premium for New Construction

Posted on September 2, 2013 · Posted in Development, Leasing

Manhattan office tenants are showing a willingness to pay a premium for newly constructed buildings. New commercial construction has not always been desired by tenants in a city so densely populated by iconic addresses and properties dripping with historic significance. This trend is emerging in Manhattan’s office space market wherein approximately 92% of the office space is over 32 years old and approximately two thirds of the office space is over 50 years old. Hence, the relatively limited supply of new office space construction–less than 20 million square feet of office space was constructed between 2000 and 2010–is increasing demand for new state-of-the-art spaces.

Many high profile tenants are willing to pay a premium for the distinct advantages of new construction such as best-in-class operations, energy savings, state-of-the-art fiber optic technology infrastructure, customizable amenities, open floor plans, secure wireless connections, and much more. Benefits such as these are believed to increase employee comfort and productivity and provide employers with a recruiting edge in attracting and retaining top talent.

The new space to meet this demand is anticipated to come in many forms, most notably upon completion of One World Trade Center, 4 World Trade Center, and 55 West 46th Street. With the additional space of these properties, plus the expected 12 million square feet from buildings in the Hudson Yards from Brookfield, Related, Extell, and The Moinian Group, the city will see 25 million square feet of new office space before 2020.

An illustrative example is Lower Manhattan’s One World Trade Center, designed by the world-renowned architect David Childs of Skidmore Owings & Merril, and promised to be one of the most technologically advanced properties of its size in the world. The building offers unobstructed views at 1,776 feet of elevation, column-free floors, five-foot window mullions allowing for modular planning, a hardened core, and flexible corner office conditions. The unique design will also afford highly flexible workplace layout, with a focus on sustainability, integrating renewable energy, interior day-lighting, recycled construction materials, and reuse of rainwater.

56% of the tower’s three million square footage has already been claimed. One high profile tenant is Conde Nast which intends to relocate its headquarters and 5,000 of its employees to floors 20-41. This 20 year lease covers approximately 1 million square feet, or one third of the building. A wide range of companies from various industries including entertainment, creative design services, advertising, media, financial, legal, and technology have expressed interest in One World Trade Center’s flexible design features, eco-friendly enhancements, and international recognition of the address.

New buildings offer tenants the best design, technology, and sustainability solutions available. Features such as these lead to enhanced comfort, morale and productivity, not to mention the operational improvements. If you’d like more information about available office real estate in Manhattan, contact Synergy Real Estate Group today. We’ll be happy to help you locate the right space at the right price.

Photo credit: JosephIRC