The Wall Street Journal checks in (registration required) on our friend the IBM Watson building (aka 51 Astor Place).
While developer Edward J. Minskoff didn't fully lease the building by the end of January like he predicted, the place is 70 percent leased, and will likely reach 90 percent in a few weeks if all the negotiations go well with prospective tenants. All this has quieted those real-estate skeptics who thought Minskoff was bananas for building the 400,000-square-foot tower on spec.
"My gut feeling was that when it was finished, the tenants would come," said Mr. Minskoff. "And that's exactly what happened."
And the long-term impact on this neighborhood?
Mr. Minksoff's tower could still face leasing challenges if his deals in the pipeline aren't signed. But if he fills the building at high rents as he predicts, his success could spur other developers to build office properties in the area or to buy older buildings and upgrade them.
"The building and tenant roster have increased the real estate value in the surrounding area." said Paul N. Glickman, vice chairman at Jones Lang LaSalle, the leasing agent for 51 Astor.
The IBM Watson Group is the anchor tenant here with 120,000 square feet.
By "upgrade", do you mean "buy, demolish and build a hideous monstrosity (supposedly) geared to the hip, happening East Village"?
ReplyDelete“You will never find a more wretched hive of scum and villainy. …We must be cautious.”
ReplyDeleteThe retail spaces listing is no longer on the RKF website. Maybe all the retail spaces are leased out.
ReplyDeleteWere doomed. They say in the rest of the article that commercial vacancy rates in "midtown south" are dropping fast, and that this ugly Watson Death Star building will just probably spur more developers to convert older loft buildings into hi tech centers. The stock bubble has finally hit the village. First it was gentrification, then it was sushification, now it's Watsonfication. Game over.
ReplyDeleteHere's some more from the article:
Many real-estate experts were skeptical in 2011 when developer Edward J. Minskoff broke ground on an office tower in the East Village. They cited the weakness of the city's economy, Mr. Minskoff's lack of preleasing and the high rents he planned to ask in an area known more for funky music than modern office space.
It looks like the skeptics were wrong.
The 400,000-square-foot tower at 51 Astor Place, which opened in May, is now more than 70% leased after just signing IBM IBM +0.17% Watson Group as its anchor tenant to 120,000 square feet. Mr. Minskoff said the building will be 90% leased in weeks if all goes well in negotiations with other prospective tenants.
And while Mr. Minskoff won't discuss lease details, market experts said he is getting the rents he needs to make the development profitable. For example, rents for the IBM Watson Group varies by floor but generally starts in the low $80s a square foot and rises to more than $90 during the lease term, according to real estate data firm CompStak.
"My gut feeling was that when it was finished, the tenants would come," said Mr. Minskoff. "And that's exactly what happened."
The strong leasing progress of 51 Astor is a sign that technology businesses are getting pickier about their locations as the sector in the city matures. In the early years of the sector's growth, tech companies were willing to sacrifice modern features to be in older loft buildings in "Silicon Alley" neighborhoods such as Midtown South where the industry was congregating.
"Traditionally there would be a trade off," said Arie Barendrecht, executive director of WiredNYC, which runs a city-sponsored program that evaluates office building technology. "You could have a business in Midtown with fantastic infrastructure, or you could move to Silicon Alley and have the cultural benefits of the community but sacrifice some of the technology."
But tenants increasingly want both, which is pumping up demand for the few modern buildings in the most desirable neighborhoods. Last year, the vacancy rate for this kind of so-called "Class A" space in Midtown South decreased to 6.1% from 9.6% in the fourth quarter of 2012, according to Jones Lang LaSalle Inc. JLL +1.71% The vacancy rate for all Manhattan space today stands at 11.1%.
@ Giovanni
ReplyDeleteWatsonfication!
Bring back the coolest café in NY, the NY Film Academy Café.
ReplyDeleteThere is plenty of room on the 3rd Ave. side.
"midtown south" - i just cried
ReplyDeletecounterstrike by claiming that 33rd St is NoDo - "north of downtown"
ReplyDeleteah, but it's hopeless
Ahh... rabbit pellets!
ReplyDelete