Office Space Buildup:
2022 has certainly been an interesting year thus far.
The first half of the year effectively marked ‘the end’ of COVID (ie. lifted mask requirements, end of private vaccine mandates), only to be followed by a second-half filled with a spate of chunky interest rate increases and a looming (or current) recession.
Judging by vacancy data, 2022 brought an unmitigated disaster to these two Midtown office submarkets:
I. Midtown Loft Buildings
Seen one loft building? You’ve seen them all.
With their mid-block and commoditized appeal, loft buildings in Midtown continue to be severely challenged in today’s market and show few signs of improvement. With their indistinguishable rectangular floor plates, front & back windows, and limited building amenities that can lure tenants back, these buildings are now in a race to the bottom on pricing.
The ‘taking rent’ in many of these buildings is now in the $25-$35 per square foot range, relative to the 2019 range of ~ $45-$60 PSF.With a handful of these buildings now coming to the market for sale, it begs the question:
What are these buildings really worth?
II. Third Avenue
For the 30 Class-A Buildings on Third Avenue between 40th & 57th Streets, the average buildup of available space now stands at 27% of total supply. Most notably, five buildings (655, 850, 830, 750 and 825) each have more than 50% of their rentable space available for lease.
While the volume of space is certainly a challenge, one positive asset for these buildings is their smaller floorplates, which can accommodate boutique sized firms (<10k SF) very well and may their saving grace; small businesses are a proven base of support for the Manhattan economy.
TL;DR?
Get educated on the market and don’t miss your opportunity to get a great deal on your office space.
Ben Blumenthal
Principal Broker | Noah & Co.
For the rest of our November 2022 Newsletter, click here.