LATEST NEWS

New Developments Lead The Rental Market Boom In New York City

The older historic buildings give way to new innovative developments cropping up all across NYC.

By Annette Barlow November 18, 2016

The skyline of a city somehow feels timeless, like a still from a movie. A geographic birthmark that represents at a glance both the history and the future of a place and its people. Yet, in reality, the skyline of any given city changes on a daily basis, and no more so than New York, where historic buildings jostle with a slew of new developments increasingly cropping up across the five boroughs.

As the city grows and changes, it finds both detractors and champions. Purists will argue that new construction is bastardizing New York’s unique footprint and architecture as block-wide developments tear, seemingly unapologetically, through historical areas. Innovators, on the other hand, see the potential for the systemic change these new developments offer, their efficiencies and malleability.

RelatedPrecious 421-a Tax Break Is Back In Play Signaling A Boom In High Rise Construction In NYC

And, as far as New York goes, it seems the innovators are tipping the balance, as demand for forward-thinking new developments reaches a zenith. Significant levels of citywide construction will always be an indicator of a healthy market, and NYC’s thriving rental market is ultimately driven by the rules of supply and demand. People want new developments—so developers build them. It’s a seemingly simple equation, and yet, purists and economists will always ask—will this zeal for new development in fact outrun supply and demand, and instead fall stall the rental market’s resounding momentum? More so, with all this demand for new construction, how will older buildings ultimately survive?

Well, according to Bisnow, economists need not worry. Boasting video footage of an expert panel at real estate agency CBRE‘s Q3 Media Event, the commercial real estate news site argues that there is no present danger of overbuilding commercial space in New York, as huge numbers of tenants continue to seek out these new developments. Purists, however, might find cause for concern. According to CBRE’s vice chairman and agency group co-head Howard Fiddle, “[Older] buildings priced correctly will lease. Those that aren’t will languish.”

So why is it that older buildings have fallen out of favor? The answer is pretty straightforward. Infrastructure and amenities are the first two considerations when developing plans for a new construction, and with only so much square footage in NYC, developers are keen to use every inch of their buildings efficiently. And contrary to belief, this ability to adapt to tenants’ needs or a location’s particular foibles from the ground up makes a new construction significantly more affordable than adapting existing buildings. Sure, asking rents are higher, but for the companies behind these developments, new construction is both efficient and cost effective.

RelatedGowanus Gentrified: Developer To Turn Old Brooklyn Warehouses Into 200,000 -Sq.Ft. Office Space

That’s great for developers, but what about tenants? Aren’t these higher prices off-putting to them? Well, it seems that new developments establish their appeal in more than just financial terms: These innovative new projects—which boast facilities such as restaurants and casual eateries, functional art installations, fitness centers, green spaces, community spaces and even on-site farms—speak to the evolving needs of modern tenants. While older buildings can offer historic charm, reputation and prestige, they often do not meet the daily needs of potential tenants, especially in comparison to their newer cousins.

And you better believe there are a lot of tenants out there. Keeping in mind supply and demand, since 2010, Manhattan has added approximately 2.9 million square feet of office space per year. Even with the city pulling 1.6 million square feet of inventory off the market each year, the city is still adding 1.3 million square feet of office space annually. And it’s not just Manhattan that is booming: Brooklyn is seeing strong activity in the rental market, with three out of the four biggest deals in the borough taking place in 2016’s third quarter. Even Roosevelt Island is getting in on the act, as plans for the Cornell Tech Campus—its academic and office space, education center and hotel, housing units and community space all due for completion in 2017—begin to really take shape.

 

Annette Barlow

ABOUT THE AUTHOR Annette Barlow

ABOUT THE AUTHOR Annette Barlow

Annette is freelance editor, sub-editor, journalist and proofreader with a fierce love of all things feminist, food and music. She is a regular fixture on the arts, culture and feature desks at The Guardian, and her words have appeared on NME, Great British Chefs, The Fly, The Line of Best Fit and Australian Times.

  • AGORAFY
    Stefano Boeri, the architect mastermind behind the famous plant-covered skyscrapers, is now designing Forest Cities in Liuzhou, China. #ForestCity #China https://goo.gl/PsTUwv
  • AGORAFY
    Auction is the second scheduled in a month for a One57 unit and it could set a NYC foreclosure record. #BillionairesRow #Foreclosures https://goo.gl/NZ3zqD
  • AGORAFY
    Once a couch-surfing website, Airbnb moves on to luxury properties, further disrupting hospitality industry. #Airbnb #Luxury https://goo.gl/7TpLk6
Is Real Estate Crowdfunding The Fix That Urban Housing In America Really Needs?
Saving money for a down payment? One can only hope. Most millennial in their twenties or thirties are mortified that they might never be able…
Brooklyn And Queens’ Real Estate Sub-Markets Continue Their Ascent To The New Heights
So, the sales prices in Brooklyn and Queens hit record highs. Again. Just like they did in December 2016 and at the end of this…
The Economy Of Car Services And Delivery Apps Might Be Making NYC Less Eco-Friendly
Living in an eco-friendly neighborhood is a good thing. And, as it always the case with the good things, it also costs more. High rents…
Building Communities: What The U.S. Developers Should Learn From Soho China
As our world emerges into the new period of globalization and technology, some of the most important by-products of this process are buildings that have…
Five Reasons Why All Entrepreneurs Must Keep Their Eyes On China
It is hard to overestimate the importance of Chinese influence on the modern global economy. Carving out a place in Chinese market and winning over…
Airbnb Up Their Game With A New Luxury Tier Featuring Mansions And Villas
Airbnb is about to seriously up their game. First, the company started testing a new service called Select in an attempt to push accommodation listings…
Will Artificial Intelligence Change Real Estate Industry In The Next Five Years?
Globalization and tech progress are the two forces that are irreversibly changing the world. Robots, machines, artificial intelligence (AI) tools, and, of course, vast amounts…
While Miami Condos Cool, Neighboring Towns and Cities Heat Up
It’s a nervous time for Miami developers as the market cools and many units remain unsold compared to a year ago. “Sales are slow with…

TOP 10