2018 set to be the year of the tenant as new office spaces floods market
For companies looking for a change in scenery or an entry into the New York market, 2018’s commercial market holds a lot of promise.
A surging supply of new and renovated office space promises favorable leases for prospective tenants, particularly in submarkets that have waned in popularity and buildings that have yet to modernize.
Yet, it’s unclear how the investor market will respond in 2018, especially in the wake of a substantial federal tax overhaul. In recent years, the commercial sector has been defined by greater density and rapid expansion, Brad Wolk, partner in the consulting group at Savills Studley, said.
Total office square footage is on the rise, but rather than stretch their legs, companies have opted for open layouts to do more with less.
In 2017, Wolk said that created a “tenant-friendly” environment, with more options for leasees and offices suited to the demands of the 21st century workforce. He expects that trend to continue in 2018.
“In the 90s and from 2000 to 2010, less than five million s/f of commercial space was added in each decade, which is vastly different from what we’re seeing today,” he said.
“From 2011 to 2020, there will be north of 20 million s/f added and for 2020 and beyond, we’re looking at an additional 17 million s/f. There is going to be a direct correlation between that and higher availability rates, which will lead to lower rents and better deals for tenants.”
New developments in Hudson Yards and Lower Manhattan, as well as the thriving neighborhood appeal of Midtown South, have disrupted the commercial market, drawing attention away from Midtown East and Times Square.