Jones Lang LaSalle
Demand outstrips new projects
3 buildings offer desirable space, but most is already taken
By Stan Luxenberg
Published on May 15, 2006
When construction of the Bank of America tower began in 2004, the bank planned to use about half of the building for its own offices. Last March, the financial giant changed plans, announcing that it would take an additional 522,000 square feet, occupying 77% of the 2.1 million-square-foot building located on the west side of Sixth Avenue, between West 42nd and West 43rd streets.
"Bank of America and other financial institutions are growing faster than they thought, and they need more space," says Mark Edelstein, a partner and head of the real estate finance group of Morrison & Foerster, a law firm.
The BofA tower is one of three major office buildings in midtown that seemed to offer promise for space-starved tenants--especially those looking for large blocks. But because much of the new space is already spoken for and demand for the remaining offices is strong, these new towers are not likely to take much pressure off the heated midtown market.
Upstairs, downstairs
Potential tenants are bidding aggressively for space on the higher floors, which boast spectacular views, say brokers. Even the lower floors are considered desirable because the buildings have convenient locations and the latest in technology and communications.
With only about 400,000 square feet left to lease, the Bank of America tower should be fully rented by the time construction is completed in the first quarter of 2008, says Thomas Bow, senior vice president of leasing for The Durst Organization Inc., which is developing the building along with Bank of America. Likely tenants will be investment banks and law firms.
Mr. Bow is shooting high, hoping to get rents of as much as $100 a square foot, comparable to some of the top rents in the city. "Tenants will pay a premium for a new building that offers a state-of-the-art working environment," he says.
For the sky-high price, the building will provide unusually clean air, purified by a filtration system. On the higher floors, some tenants can look through floor-to-ceiling glass walls for unobstructed views of the Statue of Liberty.
The New York Times Building, another project under construction, will have 1.6 million square feet. But the newspaper will occupy 900,000 square feet and another 330,000 square feet have already been leased to other tenants, according to Mary Ann Tighe, chief executive of the New York tristate region for CB Richard Ellis, the real estate firm that is assisting with leasing.
Ms. Tighe expects the building, located on Eighth Avenue between and West 41st Street, to be fully rented by the time it is completed in 2007. "We have offers on all the space right now," she says.
No longer seedy
The average lease price is currently in the mid-$70s a square foot, a figure that would have seemed impossible a few years ago, when the area still had a seedy image. But now that Times Square has become a desirable office market, law firms and media companies are eager to lease in the newspaper's building, which is near many convenient transportation hubs. Like the BofA tower, the Times Building has floor-to-ceiling glass walls instead of windows.
The most opportunities for tenants may be at the Verizon Building on Sixth Avenue, between West 41st and West 42nd streets, right across from the BofA tower. Long the aging home of the telephone company, the building was purchased by Equity Office Properties Trust last September with the idea of completely renovating it.
With Verizon holding on to 200,000 square feet, another 1.1 million square feet will be available for lease. Equity Office has just started showing the building and has not yet signed any other tenants. But the real estate investment trust is optimistic about filling the space before construction is completed.
"We are hitting the market at a time when large blocks of space are being used up," says Don Huffner, senior vice president of Equity Office.
Equity hopes to attract large and small financial firms to the building which is being completely redone, with new elevators and mechanical systems. The entire exterior will be stripped off and replaced with glass.
"The finished property will be the equal of all the new buildings that are going up in New York today," says Bob Winter, executive vice president of development for Equity Office.
Comments? cnyb@crain.com
Demand outstrips new projects
3 buildings offer desirable space, but most is already taken
By Stan Luxenberg
Published on May 15, 2006
When construction of the Bank of America tower began in 2004, the bank planned to use about half of the building for its own offices. Last March, the financial giant changed plans, announcing that it would take an additional 522,000 square feet, occupying 77% of the 2.1 million-square-foot building located on the west side of Sixth Avenue, between West 42nd and West 43rd streets.
"Bank of America and other financial institutions are growing faster than they thought, and they need more space," says Mark Edelstein, a partner and head of the real estate finance group of Morrison & Foerster, a law firm.
The BofA tower is one of three major office buildings in midtown that seemed to offer promise for space-starved tenants--especially those looking for large blocks. But because much of the new space is already spoken for and demand for the remaining offices is strong, these new towers are not likely to take much pressure off the heated midtown market.
Upstairs, downstairs
Potential tenants are bidding aggressively for space on the higher floors, which boast spectacular views, say brokers. Even the lower floors are considered desirable because the buildings have convenient locations and the latest in technology and communications.
With only about 400,000 square feet left to lease, the Bank of America tower should be fully rented by the time construction is completed in the first quarter of 2008, says Thomas Bow, senior vice president of leasing for The Durst Organization Inc., which is developing the building along with Bank of America. Likely tenants will be investment banks and law firms.
Mr. Bow is shooting high, hoping to get rents of as much as $100 a square foot, comparable to some of the top rents in the city. "Tenants will pay a premium for a new building that offers a state-of-the-art working environment," he says.
For the sky-high price, the building will provide unusually clean air, purified by a filtration system. On the higher floors, some tenants can look through floor-to-ceiling glass walls for unobstructed views of the Statue of Liberty.
The New York Times Building, another project under construction, will have 1.6 million square feet. But the newspaper will occupy 900,000 square feet and another 330,000 square feet have already been leased to other tenants, according to Mary Ann Tighe, chief executive of the New York tristate region for CB Richard Ellis, the real estate firm that is assisting with leasing.
Ms. Tighe expects the building, located on Eighth Avenue between and West 41st Street, to be fully rented by the time it is completed in 2007. "We have offers on all the space right now," she says.
No longer seedy
The average lease price is currently in the mid-$70s a square foot, a figure that would have seemed impossible a few years ago, when the area still had a seedy image. But now that Times Square has become a desirable office market, law firms and media companies are eager to lease in the newspaper's building, which is near many convenient transportation hubs. Like the BofA tower, the Times Building has floor-to-ceiling glass walls instead of windows.
The most opportunities for tenants may be at the Verizon Building on Sixth Avenue, between West 41st and West 42nd streets, right across from the BofA tower. Long the aging home of the telephone company, the building was purchased by Equity Office Properties Trust last September with the idea of completely renovating it.
With Verizon holding on to 200,000 square feet, another 1.1 million square feet will be available for lease. Equity Office has just started showing the building and has not yet signed any other tenants. But the real estate investment trust is optimistic about filling the space before construction is completed.
"We are hitting the market at a time when large blocks of space are being used up," says Don Huffner, senior vice president of Equity Office.
Equity hopes to attract large and small financial firms to the building which is being completely redone, with new elevators and mechanical systems. The entire exterior will be stripped off and replaced with glass.
"The finished property will be the equal of all the new buildings that are going up in New York today," says Bob Winter, executive vice president of development for Equity Office.
Comments? cnyb@crain.com
posted by Jones Lang LaSalle NJ News Blog at 10:32 AM
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