Some incredible revelations by a report released by a real estate services company CBRE suggest that Asia dominates world’s most expensive office spaces. According to the survey, Hong Kong continues to rule the roost, while London and Beijing have also joined the ranks of the top most overall occupancy cost. Interestingly, America’s financial nerve centre New York City that is also home to the world’s largest stock exchange is outshined by New Delhi, Tokyo’s Marunouchi/Otemachi district and London’s Central City. It is Midtown Manhattan (one of the five boroughs of NYC) that sits gingerly at the 10th place. The statistics come as a surprise because the Big Apple’s Fifth Avenue continue to hold strong as the most expensive shopping street in the world.
Sudden increase in office space rentals
Now if we closely evaluate the real estate scenario then there is a new trend that the vibrant NYC is beginning to witness. The city that houses some of the tallest buildings in the world has noticed a sudden increase in office space rentals. If some analysts are to believed it is the new tech start-ups which are to be blamed. These small tech firms with lofty desires have started devouring prime office space hitherto unofficially reserved for the financial sector. This extreme change in demand has affected the real estate prices in the city specially areas which people refer to as Midtown South or Manhattan Core. The area with considerably lower rents has now set the alarm bells ringing.
Start-ups are usually big on ideas and low on cash. Many newly registered tech firms are now scouting for cheaper options to park their ambitious vehicle. If they want cheap, it doesn’t necessarily mean simple. Their desires are as exalted at their business plans! They keep an eye for ‘cool’ hangouts with pre-built tech installations like customized cubicles, concrete flooring, exposed ceilings, trendier decor and lots of open spaces. What’s more – most of the downtown landlords have started renovating their spaces to customize the needs of their tech-centric tenants. The market sentiment is that the rents could rise as much as 20 per cent in the next year.
From resplendent skyscrapers to quirkier neighborhood
If go down to the numbers, then the approximate charges about two and a half years ago were $30 per square foot. Today it is not a less than $55-$60 per square foot – a giant leap indeed. The booming technology market is looking away from the resplendent skyscrapers in the city and setting its eyes on its quirkier neighborhood that’s home to Chelsea warehouses, Soho galleries, and spunky fashion stores. Industry experts reveal that this urban tenant does not gravitate towards glass-curtain wall buildings but seeks fully renovated industrial buildings with character.
In fact property dealers are using keywords like ‘boutique buildings’, ‘fully-operational kitchen’, ‘great public transport’, ‘fantastic natural light’, ‘windows providing gorgeous sky’, ‘flexible layout’, etc to lure the ticking minds of young entrepreneurs who do not fancy the routine.
Welcome break from the “incubator” lives
The new options are a welcome break from the ‘incubator’ lives that most professionals live in the Empire city. It is also a time in America when other key industries like law, media, architecture and investment banking have taken a backseat. They are not growing at the same pace as it was before and not consuming a bigger chunk of the real estate. This has allowed tech-startups to breathe easy for a while.
While the landlords are laughing away to the banks, many will face the heat of soaring prices soon. Will New York, specially the Manhattan core crawl up to the top most slot of the ‘Most Expensive Office Space’ list? Only time will tell.
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