Another Wave of Office Construction
As a resident of Hell’s Kitchen, a.k.a. Clinton, a.k.a. Midtown West, for the past 11 years, I’ve dealt with a lot of construction going on around me.
In fact, the stretch of West 42nd Street from Times Square to the Hudson River will soon be filled in completely with residential high-rises (and way too few grocery stores—another column for another day).
Immediately to the east of my apartment, a new tower (hotel/residence) is about to begin construction. Looking out the window, I can see residential buildings beginning to sprout around Hudson Yards. Farther south, the new spire of 1 World Trade Center shines, as does 4 World Trade Center next door.
Like ocean tides, construction ebbs and flows in New York City. And while there was no outcry about recent residential development, there are plenty of people complaining that, once again, there will be a glut of office space for eons (tell that to the powers that be in Dubai or Shanghai).
Yes, there is the World Trade Center site. Yes, there are the Hudson Yards/Midtown West sites (with its numerous mixed-use projects). Yes, there is the potential rezoning of Midtown East as well. But over the past decade and a half, we’ve also lost 13.5 million square feet of Class A office space (9/11) and had almost as much converted to residential use.
Keeping track of all the new or potential office projects today can make your head spin. Combining what’s currently under construction with what could likely be underway and completed by the end of this decade gives you approximately 21.2 million square feet—about as much as was built in the last decade. That is just one-third (or less) of what was constructed in each decade from the 1960s through the 1980s. Around 10 million square feet of that total remain in the “maybe” column for this decade; it is highly doubtful that a major new project will begin without an anchor tenant.
It’s been said that NYC doesn’t need as much office space because employers and employees use it differently than in past decades, if at all: open floor plans, green buildings, efficient layouts, desk sharing—all are terms we hear in our business every day. But NYC does keep growing; different industries needing space have sprouted, including tech, education and health care.
Although the financial services sector has not been hurting for more space, it will likely come back with some new products in its pocket. The commerce, culture, safety and vibrancy drive people here. So no need to panic—it all won’t be built in one fell swoop as in Dubai or Shanghai. But we have to make sure future tenants have what they need to keep NYC riding that wave.