Study: Office Construction Growth Still Sluggish in Manhattan
New office construction in Manhattan’s central business district will reach 2.1million sq ft in six buildings by year-end, up from 1.8 million sq ft in seven buildings this time last year, according to a recent New York Building Congress report about ongoing and planned projects in Manhattan.
However, new office space is expected to slide next year to 1.7-million sq ft in six buildings, says the study, which was published July 11. NYBC says the drop stems from the fact that some of the large office projects including 1 and 4 WTC and the International Gem Tower will be on their way to completion next year, and so the square footage of those that are under construction will be lower in 2013. NYBC adds that there are few planned work projects to replace them in 2013.
The report is based on data provided by several sources including the Real Estate Board of New York’s list of buildings constructed and planned; McGraw-Hill Construction starts data; Urbanomics, New York; the Dept. of Labor’s employment statistics; and leasing reports from brokers CB Richard Ellis, Newmark Knight Frank, and Cushman & Wakefield.
From 2000 to 2009, construction of new office space was 19 million sq ft in 21 buildings. This was offset, however, by the 2001 destruction of the World Trade Center’s twin towers, the study says. The 2000s achieved better growth with higher-density development than in the 1990s when just 10.7 million sq ft of space was built in 19 buildings.
The long-term outlook of office construction in Manhattan is strong, however, according to the report. “New York’s ongoing attractiveness as a center of commerce, along with decades of under-building in the office sector,” the report says. Also, projects currently under way including 1 and 4 WTC “should lease up without significant delay once they reach completion in late 2013 and early 2014,” it says. It adds that this will also most likely be the case for other significant projects in the works, including 3 WTC, the Gem Tower, and 250 West 55th Street, as well as 7 Bryant Park which is set to begin construction later this year.
Meanwhile, some industry firms say that the residential construction sector has begun to gain ground. One57, an 882,141-sq-ft, mixed-use hotel and condominium tower in Midtown Manhattan, is one of several large projects under way. The building topped out on June 20 and is slated for occupancy by 2013.
“Residential work will continue to be a strong sector because the old inventory has burned off and there is a demand for new work,” says Ralph Esposito, managing director and principal in charge at the New York office of Lend Lease, which is the CM on One57. “New York is the place that people want to be, people will still gravitate here so the residential market will continue [to rise],” Esposito says.