“Prime space and high floors” will drive the next wave of new construction in New York City, predicts CB Richard Ellis (CBRE) executive vice president John Maher. He believes that “high end buildings” will outperform others simply due to their quality of office space and that even though there is still a glut of office space in the market, the lack of truly quality space will “ultimately have to drive new construction.” According to CBRE, the demand for space in buildings on floors 25 and up – particularly from financial, law, media and entertainment entities – is growing, an there are currently only 1.1 million square feet of space available that meet these requirements. Not only is this demand driving up rents on existing spaces, but it is setting the stage for new construction in the near future.
Unfortunately, this demand is not necessarily translating into all sectors of commercial office space. While construction may be in the near future to create more “trophy” spaces, vacancies on the lower floors remain around 7.3 percent in Midtown NYC’s “top towers” and many firms actually would prefer to buy new construction rather than move into these lower levels. In fact, vacancies in lower levels are expected to rise in the coming year even while the demand for higher altitudes increases.
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