Aging Manhattan Skyscrapers Get Do Overs To Lure New Clients
NYC office skyscrapers are going through dramatic makeovers to compete with the new sparkling towers.
You’ve heard of flipping houses—but what of flipping 50-story high-rise office blocks in the middle of Manhattan? It takes some deep pockets to dress moribund real estate mutton as luxurious light and airy lamb. But in a place as constrained as Manhattan, making over a skyscraper no longer means simply redoing the lobby. Now, in order to compete with the new crop of gleaming towers dominating the skyline, building owners are giving their creaking old warriors a full-on redo.
According to the New York Post, at least 11 long in the tooth office towers are becoming young again, thanks to $2 billion in upgrades—as stated by CBRE. The do overs will feature buildings that date from the 1950’s to 1990’s.
The last decade has seen a dramatic change in technology, engineering and design—meaning that even buildings constructed in the late ’90’, such as developer Douglas Durst’s Four Times Square, which is being revamped, lag far behind the newer developments.
“This is a relatively new phenomenon where buildings that are not old are being completely rebuilt,” Durst said. He cites Brookfield’s $200 million pristine exterior for the aging 450 W. 33rd St., renamed 5 Manhattan West, as “an important milestone” in the new wave of major capital improvements.
That said, it’s physically impossible to make certain upgrades—like increasing the ceiling height. Older buildings have to work with the existing structures and a slew of new amenities. According to Inhabitat.com, the Goliath of NYC real estate, the Empire State Building implemented green cleaning and recycling programs, as well as infrastructure upgrades, to the tune of half a billion dollars.
The Hearst Tower, the stone base of which was constructed in 1926, received its LEED Gold Certification in 2006 after a massive revamp. Nearly 85 percent of the materials removed from the building were recycled for future use. Now, the tower uses 26 percent less energy than a traditionally designed building. Also in the mix is a rainwater collection system and light sensors. Ninety percent of the steel used in the construction is recycled.
Some things just can’t be fixed with a rehab. Cutting edge technology used in new towers—such as the new World Trade Center of Hudson Yards—can’t be retrofitted into older buildings. Rather than competing, the aim in sprucing up the old towers is being able to stop other aging buildings from eating into their rental dollars. Older building can, however, go toe to toe with flashier new constructions by offering amenities such as gyms and bike storage.
“If you’re in a 1960 building that hasn’t had a comprehensive upgrade and you need to move, you’re not going to a different 1960 building that hasn’t had one either,” said CBRE tristate Chief Executive Mary Ann Tighe.
Revamped buildings can also attract a completely different client base than their former incarnations. Case in point—90 Park Avenue, where Vornado Realty Trust invested $70 million to lure millennials to the 1960’s building through a light modern design, as reported in the Wall St. Journal. Travertine, marble, green terraces high into the sky have transformed the tower.
“We wanted to do something more youthful, with the expectation of what the millennial tenant is looking for,” said the president of Vornado’s New York division, David Greenbaum. He added, “The key is to make the building competitive with new buildings.” Vornado waited almost two decades since purchasing the tower in 1997 until the tenants leases were up to upgrade.
Vornado “wanted the building to be transformed so that it could be approached both by a more traditional Park Avenue tenant as well as a much more TAMI-type [technology, advertising, media and information sectors] tenant that was in the market as well,” said architect Dan Shannon, a principal at MdeAS P.C. who was brought on for the makeover. “So it has broad appeal by past, present and future tenancies.”
The bottom line is always cash. Giving hulking old structures a new financial booster shot is a trade-off for such a heavy investment. Asking rents prior to the redo at 90 Park Ave had been in the range of $50 to $75 a square foot. Now they are in the range of $75 to $100-plus.
Multiply that by the hundreds of thousands, and it starts making a whole lot of sense.
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