It’s been commonly known as the Garment District, but with the recent surge of tech industries moving into the area, some are calling Times Square South by a new name: Chelsea North. Confused?
“The market has changed dramatically,” said Diana Gaines, a senior director at Cushman & Wakefield, of Times Square South. “The area called Times Square South has traditionally been known as the Garment Center. In the last few years, this has become less and less the norm.”
The economic downturn forced many companies that were located in traditionally more expensive submarkets to consider alternative locations, allowing landlords to diversify their buildings.
“Fewer and fewer buildings, especially ‘avenue’ buildings, are considered ‘apparel buildings,’” she added. “The submarket benefited by this, offering a lower-cost solution in an area with superb transportation. This submarket has become a truly well-rounded office market.”
“What happened is that the growing entertainment and internet industry have run out of room in Chelsea and Union Square,” added Michael Cohen, president of Colliers International’s tristate office. “As you walk south from 34th Street, it morphs into Chelsea. You will see the demand work its way up Broadway to Times Square. Fashion is still there, but there’s a diverse mix of office tenants.”
The vacancy rate has remained high, hovering around 18 percent, according to Cushman & Wakefield’s third-quarter report, but nearly half of that is accounted for by 11 Times Square. The building, completed during the economic downturn, has seen slow leasing activity, especially since its asking rent, in the high $80s, is well above most in the district.
“Asking rents run from the high $30s [per square foot] on side-street buildings to the mid-$50s [per square foot] in buildings on avenues,” said Ms. Gaines of rents in the district. “There are some outliers that have asking rents in the $60s.”
As the rest of the markets in Midtown tighten, especially with the influx of tech companies, Times Square South will continue to see interest and activity.
“I am a realist,” Ms. Gaines commented about the future of the Times Square South market. “I believe that the market will continue to diversify and will grow slowly and steadily. The developments on the West Side by the Related Companies and Brookfield Office Properties will continue to move the accepted ‘central district’ west. This will continue to buoy the diversity of occupancy.”