Real Estate News, Market Commentary
Midtown West’s Emergence and Impact on NYC
Midtown West Impacts NYC
Midtown West, more commonly known to most as the “Hudson Yards“, has made an everlasting impact on NYC in both the city’s culture and how we experience everyday life. In this post, we are going to jump into the emergence of Midtown West and it’s impact on NYC.
Here are a few key points to keep in mind:
- The West Side has captured an outsized share of anchor tenant relocations
- Pending activity will dramatically reduce availabilities through 2022 and potentially beyond, continuing to shift leverage in favor of landlords
- Relocations to new construction are expected to marginally impact Manhattan market fundamentals
Midtown West has captured a substantial share of anchor tenant demand since 2015
38.5% of anchor-sized deals since 2015 and 25.3% of creative relocations? These are enormous stats and it doesn’t surprise us one bit. While there are plenty naysayers who say that Midtown West is to far removed, impossible to get to etc., there is no doubt that there is a serious buzz that exists and that you genuinely feel coming up from the 7 train. In such a short period of time, a city within a city has been created and we are only through Phase 1.
Midtown West tenancy is currently diversified, though the West Side is expected to become increasingly tech-centric
Again, no surprise looking at these stats. Have you been following Facebook’s enormous expansion? Google developing an even larger campus. If Gary Vee has his office here you know that this is the place to be. Hey Gary!
Strengthening demand in Midtown West has shifted leverage in favor of landlords, which is causing a run-up in rents
The first tenants in the door were the ones to get the sweetheart deals. Rents are now sky high as supply is nearly nil for the next few years until 50 Hudson, Spiral etc. come online. Watching the deals get progressive more expensive and tenant being bumped has been incredible as a real estate professional.
The current availability rate is just 3.7%, while 4.0M+ s.f. of additional activity will keep supply compressed through 2021
3.7% availability rate? You’ll be waiting until 2022 if you are on the hunt for a significant block of space.
How is this impacting Manhattan?
Occupiers moving to the West Side have and are expected to continue to expand their presence in Manhattan, marginally impacting Midtown supply through 2024.
There is no doubt that talent in today’s workplace demand the best working environment and the companies that hire them demand efficiency and the ability to further attract / retain talent. The numbers don’t lie. NYC’s economy is alive and well.