Builders meet office demand by thinking outside box
As Manhattan’s creative firms and tech startups expand, many are looking beyond Midtown and the Financial District for office space.
“An incredible amount of development is taking place outside of Midtown and Downtown,” Seth Pinsky, head of the New York Economic Development Corporation, explained during a panel discussion hosted by the accounting firm Margolin, Winer & Evens last week.
Christopher Albanese, president of the Albanese Organization, discussed his plans to build a Class A glass-curtain tower at 510 West 22nd Street in far west Chelsea, with 52 feet of frontage on High Line Park. Demand for space in the neighborhood is high. “We’re seeking $85 per s/f foot in rent,” Albanese said. “The vacancy rate in Chelsea for offices is three percent.”
Joel I. Picket, president of the Gotham Organization, said his firm will begin construction in a month or two on a mixed-use development next to the Apollo Theater on 125th Street near Frederick Douglass Boulevard, Harlem’s Gold Coast.
With crime rates down citywide, “it’s been tough to find a neighborhood where we can’t build,” said Picket, whose firm has built several successful condo projects with ground-floor retail in the West 140s. “The bricks don’t know where they are. It’s a question of cost.”
Pinsky pointed out that a mixed-use building in the Bronx, encompassing several thousand s/f of retail, office, and industrial space, has attracted a wide range of tenants since opening. “It’s not government-related, which is unusual for the Bronx,” he said.
Trendiness, too, has played a role in where the latest office buildings are rising. Developer Edward Minskoff is constructing an angular, glass-walled office building at 51 Astor Place in the East Village, where many creative types live and play. Minskoff expects rents at the building to range from $88 to $100 per s/f.
“It’s far and away the largest development we’ve done, and the coolest,” he said. “The majority of people working in it will probably be between the ages of 25 and 40.”
Biotech companies – which Pinsky hopes will flock to New York, now that Cornell University is opening a science campus on Roosevelt Island – would benefit from the building’s proximity of New York University and Cooper Union. The convergence of several subway lines in the area, including the N, R, and 6 trains, is a selling point for all tenants.
In addition to constructing 51 Astor Place from the ground up, Minskoff’s firm, Edward J. Minskoff Equities, is also retrofitting 101 Avenue of the Americas, a 23-story tower the firm built in the early ‘90s. Rents there will likely range from the mid $60s to $70s per s/f.
“The submarket has the lowest vacancy rate” in Manhattan, Minskoff said. “The neighborhood is now one of the most important in the city. It’s got hotels, retail, and mass transit.” And it’s been attracting a number of tech companies, which are relocating from Silicon Valley to New York in droves, Minskoff added.
The project is one of a handful of upgrades taking place across Manhattan, where much of the building stock is 50 to 60 years old.
In Downtown Brooklyn, where several buildings have recently been granted landmark status, a vacant federal warehouse was transformed into a top-notch industrial building. And New York University recently stepped up efforts to build an applied science campus in a rundown MTA building at 370 Jay Street.
“Just because the buildings there are old doesn’t mean they can’t be made into technologically advanced properties,” said Pinsky, who is also looking to modernize the aging office stock in Midtown East. “Many cutting-edge firms retrofit buildings.”
Take Google, which purchased a former Port Authority industrial property for $2 billion, and transformed it into a state-of-the-art data center. “Just because something is a landmark doesn’t mean it’s doomed to remain obsolete,” Pinsky said.
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