Unlike Meghan Trainor, the Plaza District isn’t all about the base—it’s about the tower. In 2014, the Plaza District picked up the pace as availability dropped 110 basis points in 12 months, down to 11.1 percent. The majority of demand for space in the area was for tower floors (20th floor and above), as 63.3 percent of the square footage leased last year was in the upper portions of buildings. This is a major change from 2013, when only 18.5 percent of the space leased within the Plaza District was on tower floors.
The average starting rent for office space in the Plaza District skyrocketed 31.1 percent to $106.57 per square foot in 2014. But there is a significant difference in starting rents for space in the base of the building (19th floor and below) compared to space on the upper floors. In 2014, tower floor starting rents averaged $120.13 per square foot, 48.5 percent higher than the $80.87 per square foot averaged for base floors. The price gap between the base and upper floors was due to 32 leases signed north of $100 per square foot for tower space, compared to only nine for base floors. Additionally, the tower floor average starting rents are significantly higher, as 13 of the tower leases started with rents ranging from $130 per square foot to $220 per square foot.
Tower floor tenants not only get gorgeous views for that higher rent, they also receive more concessions. The average tenant improvement allowance offered for tower floors was $61.41 per square foot last year, compared to $49.28 per square foot for base floors. Free rent given to tenants followed the same trend, as tower floors averaged 5.5 months of free rent, while base floors averaged only 4.5 months free.
Richard Persichetti is vice president of research, marketing and consulting at DTZ.