The Luxury Office Space Market Heats Up in New York City

May 28, 2013

Lance Leighton

Co-Founder –
Senior Managing Director, Savills Studley, Inc.
New York State Licensed Real Estate Salesperson

Call 212-326-8668

Midtown High-End Office Space is Back in Demand

New York City – Activity within the high-end office space market has been muted since the collapse of Lehman Brothers.  Economic uncertainty and instability plagued the demand for the priciest buildings in Manhattan.  As the Dow and S&P continue to make new highs, confidence levels within the boutique financial services industry are directly following suit.  As a result, the ultra-luxurious office space market has been percolating over the past several months and accordingly, it is no surprise that the most coveted office buildings and spaces in NYC have been very active.

767 Fifth Avenue (The GM Building), 375 Park Avenue (The Seagram Building), 9 West 57th Street and 510 Madison Avenue, are undoubtedly several of the most highly desired addresses in New York City and perhaps the world.  Although smaller spaces (below 10,000 square feet) tend to lease more often and more quickly, especially in the Class A+ buildings where rental rates approach and occasionally exceed $200/sf, we are now seeing leases completed and pending deals for full-floors within these trophy office towers.

Though these larger transactions are noteworthy, the demand for smaller spaces has been heating up as well.  Many tenants are demanding rare differentiators such as penthouses, extra high-ceilings, floor-to-ceiling glass, terraces, outdoor spaces, Central Park views and new construction (click here for a free search of office spaces with these features).

Although these requirements often lead to premium pricing, tenants have been willing to pay.  As a matter of fact, there have been many hedge fund managers, financiers and high net-worth individuals ponying up to get exactly what they want.  A few examples of such transactions are The McCourt Group, the family office of billionaire and former Dodger’s owner Frank McCourt who recently signed a lease for the partial 43rd floor at 888 Seventh Avenue.  The space boasts unobstructed views of Central Park and the asking rent was reportedly around $130 per square foot.  TSG Consumer products, inked a deal for the entire 46th floor at Paramount’s 712 Fifth Avenue.  The building has boutique full-floors for smaller tenants and incredible views of The Park.  However, being in the tower does not come cheap- commanding a hefty triple digit asking rent.  Itau Unibanco is expanding onto the balance of the top floor of the General Motors Building at rents that will exceed $200/sf during the term of their tenancy.

If the demand for high-end office space, DJIA and S&P are indicators of the future, it seems like we are headed in the right direction!

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