Manhattan's TAMI Revolution
NYC is healthy in most areas, especially Downtown, says Edward J. Minskoff Equities CEO Edward Minskoff, who's speaking at today's sixth annual New York State of the Market event at the New World Stages. His two latest office buildings there have been successes: the 400k SF 51 Astor Pl has paper out on its last two leases, which'll bring the building to 100% occupancy. The undisclosed tenants will join IBM Watson, 1stdibs, Mail Online, Claren Road Asset Management, and the Manhattan campus of St. John’s University. And the redeveloped 425k SF 101 Avenue of the Americas is fully leased to tenants like Two Sigma and New York Genome Center. Both buildings are in vibrant neighborhoods where younger workers want to be, he says, a major reason Minskoff went spec on both.
Indeed, if "All About That Bass" chanteuse Meghan Trainor’s No. 1 hit was about TAMIs taking over Manhattan, it would go something like this: “I’m all about Downtown, ‘bout Downtown, no Midtown.” (Interesting fact: TAMI both stands for "tech, advertisement, media, and information" and is the name of 60% of women in New Jersey.)
The growing tech and biotech sectors are leaving even the Financial District much less dependent on the financial sector (above is 51 Astor, where IBM Watson inked 120k SF for its global HQ). Edward tells us that he’s looking at a number of other office and residential projects (he can’t divulge where just yet). The only area of Manhattan he’s concerned about: the 57th Street residential corridor, where he says “five monsters” are going up that don’t fit the feel of the neighborhood, especially near Park Avenue. “I wouldn’t live 80 stories up, even if you handed me an apartment,” he says.
Another panelist, MHP president of brokerage services David Greene, says a major driver is that tenants don’t have to be in a particular location anymore; many of these companies are seeking space near where their employees live. Every day, 300,000 people come to work from Brooklyn, he says, and Downtown is just a stop or two away. According to MHP's latest Street Smarts report, TAMI tenants make up more than 40% of all relos Downtown, and more than 800 TAMI firms are now located there.
Through September, more than 4.5M SF has been leased Downtown, and MHP’s report says we'll likely surpass 6M SF for 2014. Six of Q3's top leases were Downtown, according to MHP and CoStar: Milbank Tweed's 370k SF at One Chase Manhattan Plaza; Hudson's Bay Co's 233k SF at 255 Liberty and 166k SF at 250 Vesey; the City of New York's 154k SF at 151 W Broadway; Jane Street Capital's 114k SF at 250 Vesey; and MediaMath's 103k SF at 4 WTC. MHP is prepping the repositioning of the 1.2M SF 180 Maiden Ln (above) that it will close on with Clarion Partners this year. David tells us the new lobby, floors, and amenities will all come to fruition in Q2 ’15. (If you’re wondering what tunes David, a big jazz fan, listens to, turn your dial to WBGO 88.3FM out of Newark.)
The big question Downtown: Who’s going to fill up the space along Water Street? That's what Colliers International Tri-State president and panelist Michael Cohen wants to know. “The corridor has been less popular, so it offers tenants great value in steel-and-glass buildings,” he says. Although leasing has been strong at buildings like One New York Plaza, 199 Water St, and 55 Water St, he says there are still opportunistic, large blocks available at varying price points. (It will be especially intriguing to watch what MHP does at 180 Maiden Ln.) Prices are aspiring to be comparable to Midtown, given the demographic advantages that Downtown finally has over the traditional commercial powerhouse. “For the first time, creative employees are coming from Brooklyn and not the Upper West or Upper East Sides,” he says. It will be interesting to see what landlords will do to get their spaces filled, Cohen says.
Midtown, meanwhile, is still waiting for improvement in the FIRE sector, despite major leases like Bank of Tokyo at 1221 Sixth and Schulte Roth & Zabel’s renewal and contraction at 919 Third. Cohen says statistics haven’t even calculated the space that'll be left behind by tenants like Saks Fifth Avenue and L'Oréal, and Condé Nast’s empty space has only now been factored in. “It’s either going to have to wait its turn or try and attract TAMI tenants, who’ve only been moving to Midtown by exception,” he says. This will bring tremendous opportunities to FIRE tenants, who—by the time the sector picks up again—will wish that they had acted sooner. Outside of real estate, Michael tells us he's dabbling in Broadway investment and nabbed his first Tony; he was a producer for Best Musical A Gentleman’s Guide to Love & Murder.
And coming together on stage for the first time since becoming co-chairmen of TOWN Residential, (recently reinstalled) TOWN CEO Andrew Heiberger and Thor Equities CEO Joseph Sitt will close our event with a special panel. Among the other expert speakers at Bisnow's sixth annual New York State of the Market are Ladder Capital Finance CIO Greta Guggenheim, Cantor Commercial Real Estate co-CEO Anthony Orso, Meridian Capital Group CEO Ralph Herzka, Hidrock Realty principal Abraham Hidary, Massey Knakal chairman Bob Knakal, TOWN Real Estate director Anna Zarro, and L&L Holding Co Simon Wasserberger. Join us at the New World Stages starting at 7am for some great networking and to learn about the key trends driving our market over the next 12 months.