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Thread: The Final Frontier for Development in Manhattan - Falling re

  1. #1

    Default The Final Frontier for Development in Manhattan - Falling re

    April 30, 2003

    The Final Frontier for Development in Manhattan

    A few years ago, while the dot-com and telecommunications businesses were flourishing, some of the old industrial buildings on Manhattan's far West Side attracted tenants that wanted well-wired, expansive spaces regardless of the distance from subway lines.

    In those heady times, annual rents in the area west of Eighth Avenue rose to the mid-$40's a square foot, with a few deals at more than $50, according to brokers who work in the area.

    Recently Newmark & Company Real Estate, the broker for the building at 450 West 33rd Street at 10th Avenue, advised potential tenants that the asking rent — usually the starting point for negotiations — had been reduced to $29 a square foot. And, if a company rents enough space in the 1.63-million-square-foot, 16-story building, it can have its own entrance and dedicated elevator, the Newmark executives promise.

    While some real estate executives regard the far West Side as the final frontier for development in Manhattan, and city officials envision the area adding 28 million square feet of commercial space and 12 million square feet of residential construction by midcentury, the current demand for office space has clearly declined.

    "The demand, driven by dot-com and telecom companies, encouraged owners to renovate buildings to attract people to peripheral locations," said James S. Meiskin, the president of Plymouth Partners, a broker that represents tenants. "We are talking about buildings like 111 Eighth Avenue and Starrett-Lehigh in addition to 450 West 33rd."

    Since then, he said, the disappearance or shrinking of many of those technology companies has produced empty space on the West Side. And today's pickier tenants are less willing to make the hike from faraway subways.

    "The Starrett-Lehigh Building is eight blocks from the nearest subway stop," Mr. Meiskin said. "That means there are transportation and security issues." The building is on 11th Avenue between 26th and 27th Streets.

    Nevertheless, the West Side is becoming a center for communications and nonprofit companies, David A. Falk, an executive vice president of Newmark, said. Indeed, the building at 33rd Street and 10th Avenue, which once housed the Sky Rink for ice skating on its top floor, is the home of The Daily News, the public television broadcaster WNET and DoubleClick, an Internet advertising company. The Associated Press, whose lease in Rockefeller Center expires next year, is also considering the space.

    "We have also had Planned Parenthood take 104,000 square feet next door at 424 West 33rd," Mr. Falk said.

    He said the large 115,000-square-foot floors in 450 West 33rd Street, which covers two blocks over railroad tracks between 31st and 33rd Streets, is attractive to companies that want to operate on one level, despite the distance to transportation. "You are not going to get a foreign bank that's on Park Avenue now to move here, but you are going to see a lot of activity from companies in the media and communications business over the next few months," Mr. Falk said.

    Falling rents on the West Side are no surprise because there is a large amount of sublet space putting downward pressure on rental rates across Manhattan, said Bruce Mosler, the president for United States operations at Cushman & Wakefield, the brokerage and services company.

    "Sublease space accounts for 35 percent of the current inventory and it is being offered at a 30 to 40 percent discount to direct space, so there is downward pressure," he said. But once the sublet space is absorbed, he said the office market would be in rough balance and new development would be needed to accommodate the job growth he anticipates beginning by 2005.

    With the exception of the Consolidated Edison site on the East Side just south of the United Nations, the best development sites left in Manhattan are on the far West Side, he said. By late in this decade, Mr. Mosler said, the city will be able to absorb one million square feet of new office space a year there.

    "There will have to be an upfront investment in infrastructure including mass transportation, but this is the last great area for development," he said. "If that does not happen, development may seep out of the city as it has in the past to the New Jersey waterfront."

    Mr. Meiskin, the tenant broker, noted that in a weak market tenants were in a position to demand concessions from landlords, including periods of free rent and contributions to the cost of interior construction.

    Adding in these concessions reduces the effective rent, he said. Taking an asking rent of $29 a square foot as an example of a starting point in the current market, he said, "With a year and a half of free rent and $60 to $70 a square foot in tenant allowance, you are looking at a net effective rent of about $23 a square foot."

    Copyright 2003*The New York Times Company

  2. #2
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    Default The Final Frontier for Development in Manhattan

    I still think that if there is a lot of office space created - in Manhattan, BK, Queens, wherever, it will be rented eventually. *With more office space, that more of a decrease in rents (most likely), which is what the city really needs to attract more business (and residents, for that matter).

    Can you imagine the demand from the burbs, and all over America and the world (even in the city), if rents hovered near $20-$30/sq. ft.? *

    It may reduce the developers profits, but they may be able to make it up in volume.

  3. #3

    Default The Final Frontier for Development in Manhattan

    He said the large 115,000-square-foot floors in 450 West 33rd Street, which covers two blocks over railroad tracks between 31st and 33rd Streets, is attractive to companies that want to operate on one level

    That thing is huge.
    Could it be the record of square footage for a single floor in Manhattan ?

  4. #4
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    Oct 2002
    Manhattan - South Village

    Default The Final Frontier for Development in Manhattan

    Associated Press Announces Move to New Headquarters

    Filed at 11:01 a.m. ET

    NEW YORK (AP) -- The Associated Press announced Wednesday it will move its headquarters next year from Rockefeller Center to larger offices on the West Side of Manhattan, where it will consolidate all of its New York news and management operations under one roof.

    AP, the world's oldest and largest newsgathering organization, will occupy the top three floors of a 16-story building with views of the midtown Manhattan skyline and the Hudson River, just west of Madison Square Garden and Penn Station.

    The building, located at 450 West 33rd Street, is owned by Max Capital Management Corp. Financial terms of the new lease were not disclosed. AP's current lease, in the building at 50 Rockefeller Plaza that has borne its name for 65 years, expires in September 2004.

    ``The bigger, more open floors and high ceilings in the new building will allow us to design a 21st century newsroom for AP's television, radio, text, image and multimedia services and to better support the way our producers, reporters, editors and photographers work together,'' said AP President and CEO Tom Curley.

    The new space will also include such amenities as a large outdoor terrace, athletic facilities and meeting and conference rooms.

    Currently, AP's New York operations are spread among four locations. The main news and photo departments occupy most of the fourth floor of ``50 Rock,'' as the building has been known through the years since AP moved there in 1938. The news service also leases several other floors in the building. AP's Internet newsroom is in a building across the street; a technical support center is housed further west in Midtown, and AP Television News (APTN) studios are on the Upper West Side.

    Curley said that in addition to providing space where all those operations can be brought together, the move will allow AP to avoid the substantial increase in rent that would have come with renewal of its current Rockefeller Center lease.

    ``The move makes excellent sense for AP from every standpoint,'' Curley said.

    The initial term of the new lease is 15 years and calls for AP to take 290,773 square feet. The AP's four New York offices currently total about 207,000 square feet.

    ``AP is a welcome addition to what has become a prominent hub for media in New York,'' said Anthony Westreich, president and principal of Max Capital Management Corp. The building also houses news and business offices of the New York Daily News, New York offices of U.S. News and World Report, and public television station WNET.

    The building, constructed in 1967, was extensively modernized in 1991.

    AP will be moving into space currently occupied by the headquarters offices of DoubleClick, the Internet advertising services company.

    It will be AP's sixth New York City headquarters. The cooperative first opened its doors in 1848 at 150 Broadway, near where the World Trade Center would rise more than a century later.

    Only one of those earlier buildings survives today, an ornate 19th century structure on Chambers Street facing the back of City Hall. AP had its headquarters there from 1913 to 1924.

    The AP provides content to more than 15,000 news outlets with a daily reach of 1 billion people around the world. Its multimedia services are distributed by satellite and the Internet to more than 120 nations.

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