November 18, 2009
The Observer is reporting that the period in time which tenants in NYC were shunning expensive office space is over. They’re signing up again to pay triple-digits. Led by smaller tenants the contagion is spreading…
The luxury momentum is rooted in the revival of the hedge fund leasing market. Following Lehman Brothers’ demise, hedge funds and boutique firms shed 2.3 million square feet of office space in midtown, according to Cynthia Wasserberger, a senior vice president at Jones Lang LaSalle who tracks the hedge fund market closely.
By August, fully 44 percent of that space had been leased, subleased, or taken off the market. More precisely, 26 percent (or 583,000 square feet) has since been leased (or has a lease pending), and 18 percent (408,000 square feet) has been taken off the market.
In the over-$100-a-square-foot market, the resurgence began with smaller firms, those owned by only one or two principals who wanted between 3,000 and 10,000 square feet. Because of their small size, these firms had fewer investors eagle-eyeing the bottom line.
But even that is beginning to change. Mr. Morrows has two leases in negotiations at the Seagram Building for space of more than 20,000 square feet in size.
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