Content area
Full Text
Times Square, a neighborhood that until now has been largely immune to deteriorating conditions in Manhattan office leasing, is suddenly awash in available space.
As a result, leasing executives are slashing asking rents by 20%, to around $55 per square foot.
The new wave of space offerings, led by a 400,000-squarefoot block at Bertelsmann's North American headquarters building, has more than doubled the vacancy rate for Class A space in the area. That rate is 13% when locations just coming onto the market or quietly available are factored in, according to statistics compiled by a real estate firm for Crain's New York Business. A year ago, it was 6%.
Taken by surprise
This sudden softening of the Times Square office market is a shock to the neighborhood, and a particular problem for developer Boston Properties Inc., which is building a skyscraper in the very heart of the area without having a single tenant lined up.
The publicly traded real estate investment trust is trying to fill 1.2 million square feet of space at Times Square Tower, on Seventh Avenue and 42nd Street, because of the downfall of its original anchor tenant, Arthur Andersen. The Bertelsmann Building, four blocks north at 1540 Broadway, has already taken away a prospective tenant: Pillsbury Winthrop, which had been negotiating with Boston Properties for 200,000 square feet.
Price is riot
"Economics are definitely a consideration," says Donald Kilpatrick, managing partner of Pillsbury Winthrop's New York office,...