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 amreprints
If Don Draper still ran an advertising agency, he’d have a very different Manhattan life. Instead of a dozen martinis and oysters at Grand Central every night after work, it’d probably be a quick Peroni and antipasti at Eataly before hitting the gym.
He might even be home early enough to kiss Betty and read a book to his kids. And, of course, he’d work in a fabulous open-plan office in Manhattan’s most desired commercial real estate market, Midtown South.
Indeed, advertising agencies like Grey Global Group, anxious to prove that they’re as hip and young as their creative rivals, now have headquarters at addresses like 200 Fifth Avenue. Account execs jostle for lunch tables around the Flatiron, Hudson Square, Soho and Chelsea, with Silicon Alley Wunderkinder, models, publishers and, of course, the Google guys.
“This isn’t your father’s New York City, where people commute in from Westchester,” said Gregg Weisser, executive managing director of leasing at the Moinian Group, which owns several properties in the area. “Midtown South is the hottest market in the country right now.”
Workers in Midtown South are blessed with some of the best facilities in the office market. They can go for drinks after work at Manhattan’s hottest bars, head to dinner at any one of the new restaurants opening by the day, and then walk home to their apartments, which are increasingly in the same neighborhood they work.
“It’s really a 24/7 micro market where everything is available all the time,” said Mr. Weisser. “It’s a live/work/play environment. People want a 24-hour atmosphere.”
Midtown South ended the first quarter of 2012 with a 5.9 percent vacancy rate, down 2.1 percent from a year earlier. The area is filling offices faster than any other market in New York, and some brokers argue it’s now the tightest market in the country.
Although the $1.9 billion purchase of 111 Eighth Avenue by Google in 2010 didn’t start the trend, it certainly increased the district’s gravitational pull—and it continues to drive demand for more offices.
As the hungry search-engine giant, which has promised to hire even more New Yorkers over the coming year, gobbles up more and more space in the building, it has been pushing other smaller tech firms out, sending them searching for other cool office space in the area, Cushman & Wakefield senior economist Ken McCarthy said.