‘Commercial Basis’ explores how technology, branding and demographic preferences are shaping office and retail real estate in New York City. As these forces break down the barriers from where we live to where we work and shop, Lead Commercial Specialist Alex Cohen will assess the impact on real estate values and opportunities.
I’m often asked what is the “best” office building in Manhattan. About ten years ago, in fact, I was asked this question by a reporter at the now defunct New York Sun. I talked about how swanky buildings like the General Motors Building, 9 West 57th Street, the Seagram’s Building and Lever House, with their “plum locations, trophy modernist architecture and overall cachet” clearly made them the most desirable. Even five years ago, I probably would have provided a similar response. Today, in contrast, I categorize buildings like Chelsea Market, the Starrett Lehigh Building and perhaps even Industry City in Sunset Park, Brooklyn among the most desirable of New York office structures. What has changed? It’s not that prime post-war Plaza District office towers like 9 West 57th Street have lost their cache with top-tier hedge fund scions and private equity fund managers. What has rapidly evolved perceptions of the ideal work place is the impact of technology on how we work and the shifting demographics, tastes and type of firms driving job growth in New York.
Where C-Suite executives actually live has already been an important driver in the choice of an office location. For decades this has helped make the office buildings of Midtown East offices particularly attractive as so many executives lived on the Upper East Side or commuted from the suburbs into Grand Central Terminal. Large financial services firms are now a less dominant employer in the city as technology, creative and media firms have become engines of job growth. Today’s executives, particularly those younger than 45, are increasingly drawn to live as well in neighborhoods like Chelsea, SoHo, Tribeca or Dumbo. And this is impacting the relative desirability for offices of neighborhoods across industries.
But the shift in office preferences is more than just about a building’s locale. The ubiquity of mobile devices allows us to productively do many kind of work tasks anywhere – at home, in a coffee bar, or even on an airplane. Most of us still need to be affiliated with a “workplace” and more companies now recognize that the essential purpose of the office is to help attract and retain the best talent and to provide opportunities for face-to-face collaboration to drive performance and innovation. Millennials, who will soon dominate the corporate workforce, prefer to work in 24-hour mixed-use neighborhoods with shops, restaurants and active street life – ideally close to where they live. They also are exceedingly brand conscious, not only in terms of what products they choose to buy or rent, but in how they experience the spaces in which they live and work. Formerly industrial, side or-multi-core buildings like Chelsea Market, with their mixed retail/office vibe are ideally suited to allow companies to create branded, team-oriented office configurations. Center-core, prime office buildings, like the duplicative 1960s office towers along Sixth Avenue in the 40s, where divisions of offices and bullpens typically ring a large center-core of mechanical space, are less appealing today to firms looking to stimulate collaboration, learning and experimentation.
Sunset Park, Brooklyn, was never considered a particularly accessible location to attract Manhattan-based firms. But the concentration of tech-savvy millennials now living in Williamsburg, Bushwick and beyond has changed the equation and made this waterfront location attractive. Industry City is a 16 building, six million square foot industrial and mixed-use property in Sunset Park currently going through redevelopment. The complex’s food hall, programmed exterior spaces for gatherings and outdoor activities, WiredScore connectivity certification, maker’s guild for design, production and sales of furniture, jewelry and crafts have all combined with a tempting lease pricing structure to attract Manhattan tenants like Time, Inc., which is in the process of relocating its Technology, Content Solutions and Editorial Innovation departments there.
As the pace of change accelerates, some of us may find ourselves in five years working in neighborhoods we never knew even existed today.