Blah-za District! Submarket Struggling to Fill Vacancies
The Plaza district submarket is struggling with a 12.3 percent vacancy rate, its highest in two years, as the area is losing financial services firms while also being passed over by tenants for much hipper alternatives in the Downtown and Midtown South markets.
“Right now, Midtown just isn’t cool,” Jason Pizer, president of Trinity Real Estate, said during a Bisnow forum that was featured in Bloomberg’s report on the Plaza district.
“The people who come to our buildings, they use words like ‘dude’ and ‘totally.’ They pound you, they don’t shake your hand. And right now, those are the ones making the space decisions,” Mr. Pizer added.
While the Plaza district is home to notable office buildings like Sheldon Solow’s 9 W. 57th Street and the General Motors Building, it is also home to a struggling financial industry that has suffered 60,000 job cuts across the world in the past year. At Mr. Solow’s building, nearly half of the 452,000 square feet of available space has been on the market for nearly a year, according to Bloomberg. Some of that space was previously leased to Bank of America Corp. GM’s asset-management firm has put 114,000 square feet on the market for sublease at the GM Building, which is owned by Boston Properties.
At 666 Fifth Avenue, a building that is co-owned by Vornado Realty Trust and Kushner Companies, recently put 234,000 square feet that was previously leased by Citigroup back on the market in August. The building has nearly 500,000 square feet available for rent, according to Bloomberg. Kushner Companies is owned by Jared Kushner, who is also the publisher of The Commercial Observer.
Other buildings dealing with sizable vacancies include 280 Park Avenue, which took back space previously rented by Deutsche Bank AG and The National Football League. 510 Madison Avenue, another office building owned by Boston Properties, is 55 percent leased.
Despite these vacancies, Cassidy Turley’s Peter Hennessy remained confident that the Plaza district will rebound.
“This may be somewhat of an aberration in the marketplace,” Mr. Hennessy told Bloomberg. “How often is the Plaza the weakest market in Midtown? We need some stability both in Europe and in the United States, and we need some certainty about what our tax environment is going to look like going in post-2013.”