Buy Office Space Nyc
While Morgan Stanley recently leased more space, and JPMorgan Chase & Co. is building a state-of-the-art skyscraper, the broader trend for banks has been toward scaling back. HSBC Holdings Plc is relocating its U.S. headquarters to a new tower in the Hudson Yards area, but the footprint is less than half of its current size in the city.
buy office space nyc
Even as many banks have been vocal about the importance of being in the office, their large blocks of space to accommodate thousands of people may be more ripe for consolidation in the age of hybrid work. Other companies, such as JPMorgan and Goldman Sachs Group Inc., outright own their buildings and are less apt to be in the leasing market.
Tech companies have also been active in the market, surpassing financial-service and insurance companies on new leasing in the past two years, Savills said. Facebook parent Meta Platforms Inc. is taking more space at an East Village tower, nearly filling the building. Amazon.com Inc. has also been seeking to expand in New York.
Roughly 90 million square feet of space was available to rent as of the first quarter, and 20.3 million of that was sublease space, Savills said. Leasing totaled just 7.7 million square feet in the same period.
Even more sublease space has hit the market in the past couple weeks alone, a sign that employers are starting to get serious about their post-pandemic office plans and long-term flexible work, said David Goldstein, vice chairman at Savills. Return to office has been stubbornly slow: About 38% of New York-area workers were back at their buildings as of May 4, according to security firm Kastle Systems, a figure that has been little changed since mid-March.
The cost of buying versus leasing office space can vary significantly. Businesses must consider the upfront costs of purchasing a property, such as down payments and closing costs. They should also consider ongoing ownership costs, such as mortgage payments, property taxes, and maintenance fees. On the other hand, leasing typically involves lower upfront costs. Nevertheless, monthly rental fees can snowball long-term and end up higher than ownership costs.
Buying office space is a good decision if a business wants to establish a long-term presence in a location and if the amount of space it requires remains relatively the same over the long term. A medical tenant is an excellent example of this. On the other hand, leasing provides flexibility for businesses anticipating growth or adapting to changing needs. For instance, how can a business justify applying for a mortgage and making a downpayment of hundreds of thousands or millions of dollars only to relocate in 2-3 years?
Market conditions can influence the decision to buy or lease office space. For example, if property values are high and rents are low, it may make more sense to lease rather than buy. Conversely, buying may be more advantageous if property values are down and rents are high.
Before deciding if purchasing office space is right for you, you should evaluate a few things. First, is your business the type that would benefit from buying rather than renting? What commercial inventory is available for purchase, and do you have the budget? Finally, what are the pros and cons?
Are you looking for office space in Manhattan? Is your business seeking out space in a modern building with state-of-the-art amenities? Or are you a small startup that needs little more than a budget loft? Contact us, and we can help you find the best option for your business.
Hyundai, based in Seoul, is paying about $275 million in cash for 15 Laight St. in the Tribeca neighborhood, according to people familiar with the matter, who asked not to be named because the transaction is private. The eight-story boutique office building near the Holland Tunnel was newly redeveloped and includes outdoor terraces on each floor.
The developers are buying the Financial District building from Rudin Management in a deal reported last month. Rather than keeping the office property in place, however, the Wall Street Journal reported the developers plan on converting it into a residential building.
Office conversions have become increasingly of interest to developers and landlords as the office market has cratered during the pandemic. Older office buildings in particular are less attractive to office tenants than ever before as a flight to quality has left questions about the future of these older properties.
The eighth floor at 218 W. 40th St. is ready for any office tenant that wants to move in. The 14,000-square-foot space has whitewashed columns, floor-to-ceiling windows letting in an enormous amount of natural light, and offices built on both sides of the elevator bank to take advantage of windows looking east.
The prebuilt space, as it is known in real estate jargon, is the showcase for the Garment Center office building, which needs lots of new tenants. The 12-story building will soon have four empty floors, as well as a ground floor space that has been vacant for years.
Owner Bob Savitt is well aware of the buzz around converting vacant office space into residential apartments, as the pandemic has had a lasting impact on office space rentals and occupancy. The mostly older office buildings in the Garment Center are ripe targets, according to real estate experts.
The appeal of the conversion concept is that it could solve two problems at once: New York now has too much office space, some of it functionally obsolete, and the city desperately needs more housing. Such a move would also preserve tax revenue that would otherwise be lost if the commercial space remains unfilled.
The vacancy rate could be headed higher. Some 13 million square feet of new office space is already under construction. And several multi-billion-dollar projects, including a new tower to replace the Hyatt at Grand Central, are on the drawing boards.
The Adams administration projects that converting office buildings could create 20,000 new apartments housing 40,000 people. The Real Estate Board of New York last year estimated some 20 million square feet of office space below 60th Street is ripe for conversion and could be turned into about 14,000 apartments.
The conventional wisdom is that companies will want to occupy new, modern office space, even at high rents, while older, more cramped office buildings will struggle to find tenants and will become obsolete. Areas likely to see the most conversions are Third Avenue in Midtown, the Garment Center and Herald Square.
Albany will need to overhaul a state law that limits the density of residential apartment buildings, because many of the Midtown office buildings have been built with much more space per floor than is allowed for apartments. There could be opposition since Assembly Housing Chair Linda Rosenthal says she is not ready to support that provision. The state legislature may also need to relax restrictions including rules on natural light in residential units.
City Hall will have to revise the 2018 Garment Center zoning, which loosened restrictions on conversion of manufacturing space, but prohibited any residential use. The local business improvement district is strongly in favor of the move, but advocates for the few remaining garment companies have opposed past efforts to change the zoning. Only 3,000 garment workers remain in the neighborhood, and their shops occupy only about 730,000 square feet, according to the BID.
Then there are structural impediments. Most office buildings in Midtown were built in the 1960s with large floor plates, columns and windows along the exterior. Many would have to open a new core in the center of the building to provide windows and light, a very costly undertaking that also drastically reduces the amount of space available for apartments.
Owners of office buildings are rarely experts in conversions, so most would sell to specialists in order to carry out the process. Given the costs involved, converters will want to take on only buildings they can acquire cheaply.
All those reasons are why Savitt has decided to try to lease 218 W. 40th St. to office tenants, with annual per-square-foot rents in the $40s, rather than convert it. He says he is talking to firms in law and accounting as well as health care and tech. Yet he thinks the conversion of other buildings in the neighborhood will be crucial to his success.
If a building has only one meter, your electric charges may simply be lumped in with your rent. This method is the riskiest for tenants. The landlord usually estimates your electricity usage by looking at your office equipment and asking how many hours you use each piece in a typical day or week. Such estimates are inherently less certain than measuring the amount of electricity you use; on one Manhattan block, the basic rate landlords charge for electricity varies more than 30%.
Casualties. Many leases have clauses allowing the landlord to terminate the lease after a minor casualty affecting the building, even though your office space remains quite usable. This clause gives the landlord an opportunity to force you out in a rising market or force you to renegotiate unrelated parts of your lease before it will agree to restore the damage.
Some landlords will insist on the right to take back space you want to sublease. This allows a landlord to regain space in a rising market and rent it out itself, perhaps negotiating a longer term with another tenant. If your lease contains a clause like this, make sure the landlord is limited to taking back only the space you want to sublease for the time you want to sublease it. 041b061a72