Off the avenue: Is Park Avenue losing its edge in the office market?

Posted On Mon, August 22, 2016 By

Posted On Mon, August 22, 2016 By In Midtown East, real estate trends

Park Avenue has for decades been the office district of choice for many of the city’s high-profile–and high-rent–corporations. But a recent Crain’s article points to impending departures–such as the decision of investment firm Black Rock to decamp for new space in Hudson Yards or the World Trade Center, raising the question of whether the avenue’s biggest office zone, from East 45th to East 59th streets, is falling out of favor with big-ticket business tenants.

The city’s office market is, without a doubt, changing. Industries like tech are growing and the financial industry is consolidating and in some cases downsizing its office space. The neighborhood, which charges the city’s highest average rents, has been slow to catch up with the needs of new office tenants.

425 Park Avenue, Foster + Partners, Midtown East
Foster + Partners’ design for a new 893-foot tower at 425 Park Avenue

Park Avenue’s office buildings, are, for example, over 55 years old on average; many have low ceilings and, in comparison to new towers’ open spaces filled with light and air, are a veritable forest of structural columns. Says David Levinson, chairman and CEO of L&L Holding Company, “Would you buy a 20-year-old computer or a cellphone that is the size of a brick? When you’re breathing filtered air and your electric and phone bills go down because of the better technology and the productivity of your workers goes up because they’re happy, you realize you want to be in new space.” This may be why BlackRock has chosen to let the lease on its 700,000 square feet of office space expire in 2023.

Many of the area’s landlords, however, feel there’s no cause for concern. John Powers, head of Boston Properties’ New York office says big-ticket tenants have moved from Park Avenue in the past. “…the space always gets filled.” For example, art and real estate brokerage Sotheby’s is rumored to be considering a move to 399 Park Avenue when Citibank moves out of its 385,000 square-foot space in the tower next summer.

The in-progress 425 Park Avenue, L&L’s 670,000-square-foot luxury office tower between East 55th and East 56th streets, has snagged the city’s highest-priced lease ever–as much as $300 per square foot–in a deal with hedge fund Citadel. And hip office-sharing company WeWork has leased 300 Park, evidence that the area may well be keeping up with the times.

In fact, some landlords see an opportunity to retool the central business corridor for a new era. The aforementioned 399 Park will be getting $50 million worth of upgrades that include a new metal façade, a roof garden and a new office floor atop a large setback. In the months ahead, the city is expected to revive plans for rezoning midtown east to allow taller office towers, and many area landlords want to keep their options open. Vornado Realty Trust, for example, is putting clauses into its 350 Park Avenue leases that will allow it to clear out the building should they want to demolish it and replace it with a state-of-the-art skyscraper in the future.

[Via Crains]

RELATED:

Tags : , , , , , , ,

Neighborhoods : Midtown East

MOST RECENT ARTICLES

  • Philip Johnson’s Rockefeller Guest House, a ‘secret’ modernist gem on Manhattan’s east side

    Philip Johnson’s Rockefeller Guest House, a ‘secret’ modernist gem on Manhattan’s east side

    Just down the street from the now-closed modernist treasure trove and icon that was the Four Seasons in Manhattan’s east ...
  • Bioswales face backlash from city residents for being eyesores

    Bioswales face backlash from city residents for being eyesores

    While you may have never heard of the term “bioswale,” you have probably seen these curbside gardens throughout the city. ...
  • David Bowie’s former Central Park South condo lists for $6.5M with his personal piano included

    David Bowie’s former Central Park South condo lists for $6.5M with his personal piano included

    Sure, a piano is always a nice touch, especially in a classic Central Park South condo like this. But when ...
  • How elevators are adapting to supertall towers; Get Shake Shack delivered

    How elevators are adapting to supertall towers; Get Shake Shack delivered

    17th century Barberini tapestries now on view at the Cathedral of St. John the Divine. [Untapped] Baseball commentator and former ...
  • Former Citicorp Center might lose Sasaki fountain as part of plaza redesign

    Former Citicorp Center might lose Sasaki fountain as part of plaza redesign

    Earlier this month, 6sqft revealed renderings of 601 Lexington Avenue‘s (the Midtown East skyscraper formerly known as the Citicorp Center) new ...
  • Art Nerd New York’s top event picks for the week – 3/23-3/29

    Art Nerd New York’s top event picks for the week – 3/23-3/29

    In a city where hundreds of interesting events occur each week, it can be hard to pick and choose your ...
  • Iconic ballet dancer Mikhail Baryshnikov buys Harlem condo for $1.4 million

    Iconic ballet dancer Mikhail Baryshnikov buys Harlem condo for $1.4 million

    Mikhail Baryshnikov, who fled the Soviet Union in 1974 and landed in Canada is today considered one of the greatest ballet dancers ...
  • Starting Monday, three Brooklyn R train stations will shut down for six months

    Starting Monday, three Brooklyn R train stations will shut down for six months

    Last January, Governor Cuomo announced a massive undertaking to “modernize and fundamentally transform” the MTA and the subway by adding ...
  • Greta Garbo’s exclusive East Side co-op hits the market for the first time in 64 years, asking $6M

    Greta Garbo’s exclusive East Side co-op hits the market for the first time in 64 years, asking $6M

    For the first time in decades, an apartment in The Campanile, an exclusive co-op building in the Beekman/Sutton Place neighborhood, ...
  • The least affordable U.S. city for public transit isn’t NYC (and more fun facts about the cost of commuting)

    The least affordable U.S. city for public transit isn’t NYC (and more fun facts about the cost of commuting)

    In light of NYC’s recent subway fare hike that bumped the price of a monthly pass to $121, the data jocks ...
  • For $675K this tiny West Village studio is big on rustic loft style

    For $675K this tiny West Village studio is big on rustic loft style

    This completely renovated loft-style studio co-op at 9 Barrow Street may be tiny with little more than 300 square feet of ...
  • Dreamy furnished studio with lots of greenery asks $3,200/month in the East Village

    Dreamy furnished studio with lots of greenery asks $3,200/month in the East Village

    This furnished rental at 527 East 12th Street in the East Village is downright dreamy. The exposed brick has been painted white ...

SIGN UP FOR OUR NEWSLETTERS

Thank you, your sign-up request was successful!
This email address is already subscribed, thank you!
Please provide a valid email address.
Please complete the CAPTCHA.
Oops. Something went wrong. Please try again later.