Midtown Manhattan, once the pinnacle of US office markets, is facing an increase in large, empty work spaces.
New towers are opening and tenants spreading out across the city, including to outer boroughs that businesses once shunned.
By 2017, 21m square feet (1.2m square metres) of Midtown’s class A offices, or 14% of the market, will be available, Keith DeCoster, director of US real estate analytics for brokerage, Savills Studley, said.
That’s just shy of the 22.6m square feet of top-quality space that was available at the height of the last recession, in early 2009.
The projection, which assumes a continuing economic recovery, “is a very conservative estimate,” Mr DeCoster said.
“It could certainly push higher,” if there’s a decline in job growth or wealth creation. Midtown, home to such pricey office meccas as Park Avenue, the Plaza District and Avenue of the Americas, has been hit by departures.
Major companies have been lured to new or renovated buildings downtown and to the Hudson Yards-area developments on the far west side.
Can Midtown’s core, where rents are still below the record levels set before the financial crisis, stay competitive, especially if the economy slips.
Financial companies KKR, Wells Fargo, and Boston Consulting are leaving Midtown offices to go to Hudson Yards.
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