Quality over Quantity (
A message from Ben Blumenthal) -
Over the last month, a number of large (and long-term) leases in the Midtown market have been announced, the majority of which share one common denominator: the spaces sit in either newly constructed or recently renovated office buildings.
This trend reinforces what Landlord’s have touted as the “flight to quality”, whereby companies are specifically seeking buildings that can be an attractive draw for their employees to return to and enjoy working within - everything from location and building age to upgraded lobbies, clean-air filtration, food offerings, outdoor space, and fitness and personal amenities, among others.
One of the areas where this type of offering has been available and capitalized on by value-conscious tenants: Times Square. Long neglected by NYC-based companies due to the stigma and quality of life concerns, the submarket's 6M+ square feet of relatively new office buildings, ideal accessibility in the middle of the commuter triangle (GCT, PABT, PENN), and close proximity to the majority of subway lines has made the area one of the most active submarkets during the city's rebound.
Some of the most recent deals include:
At the same time, hundreds of loft buildings located on the fringes of Times Square and within the Garment and Penn Plaza districts remain stubbornly vacant and other than their ability to discount pricing, offer little value to distinguish one from the other.
It’s these buildings that will continue experiencing headwinds until (and unless) the market demand catches up, which may not be for another 3-5 years. At the same time, there are various pieces of legislation circulating that could ultimately incentivize these buildings to be torn down, either due to rezoning that allows for larger uses or environmental compliance that makes retrofitting uneconomical.
Until next month!
Noah & Co.
For the rest of our January 2022 Newsletter, click here.