The Big Squeeze: How Technology Start-Ups Found Midtown South, and What Happens When the Bubble Bursts
By Jotham Sederstrom April 24, 2012 9:00 am
reprintsSmaller tech firms are also competing with the big guys. Facebook, IBM and Amazon (AMZN) have all been spotted this year checking out office space in the area. Microsoft was reportedly unable to find an office in Midtown South big enough for its needs.
Average rent has jumped from $45.50 to nearly $46 during the last quarter of 2011, according to Cushman & Wakefield (CWK) data. Rents in the area’s Class A buildings were up to nearly $70 per square foot last year.
Manhattan on average saw a 3 percent spike in rental prices in 2011, but in places like Chelsea, Hudson Square and the Madison/Union Square areas, costs bounced nearly 20 percent.
Thankfully, said Mr. Weisser, the inventory of Midtown South suits the industries moving in there.
“They take up less space,” said Mr. Weisser. “Knowledge workers are often telecommuters—working from home or on the road.”
But there are, of course, exceptions.
Brit publisher Pearson snatched up 270,000 square feet in at 330 Hudson Street, thanks in part to some sweet tax breaks from the city. In exchange for bringing its roughly 600 employees working in Westchester and New Jersey offices to Manhattan, the city offered the publishing house $9 million in tax credits and $4.5 million in energy cost savings.
“The Hudson Square area is precisely the type of vibrant, stimulating center for media, education and digital services for businesses like ours,” said Will Ethridge, CEO of Pearson North America.
Boston-based Beacon Capital Partners signed a 99-year lease on the building from Trinity Real Estate last year, agreeing to sink $113 million into renovations of the 440,000-square-foot building. Trinity bowed out of a similar lease with TriBeCa Partners in 2011 after three years when its renovation plan stalled.
The Pearson deal in September topped off a busy leasing year for the district.
“In the past year, more than 400,000 square feet of space in Hudson Square was leased by creative businesses that came to the district to be close to peers in the industry,” said Ellen Baer, president of the Hudson Square Connection Business Improvement District. Pearson wasn’t the only British firm to move into the area.
