Office Landlords Look to High-End Condos for Inspiration
November 05 2017 - 9:29AM
Dow Jones News
By Keiko Morris
Five years ago, Manhattan office landlords tended to build out
smaller spaces just nice enough to attract tenants. Light wood
doors, inexpensive carpeting, dropped ceiling tiles and maybe a
pantry with a microwave usually did the trick.
Tenants today are expecting more.
At 145 E. 57th St., owners ABS Partners Real Estate and Benenson
Funding Corp. drew inspiration from luxury residential condominiums
when designing the prebuilt office space on six floors, said John
Brod, a partner at ABS. The $20 million improvement project
includes large pantry spaces with oversize marble islands, Miele
brand convection and microwave ovens, faucets for both sparkling
and still water as well as subzero ice-makers.
Because new office design incorporates many elements from the
home, the partners studied finishes used in ultra-high-end condo
projects such as 432 Park Ave., Mr. Brod said. They wanted to stand
out now that landlords building out unleased office space for
smaller tenants has become widespread. The owners spent an
estimated $140 a square foot, he said.
"There are a lot of prebuilts and they all look alike," Mr. Brod
said. "We specifically set out to build a better product."
In a competitive office market, landlords are taking a bigger
risk, spending more to build finished office spaces before leasing
them out. They hope to make the idea of relocating less daunting
for tenants and fill empty space more quickly while maintaining and
boosting rents, brokers and real-estate executives said. Landlords
also have been willing to build out larger than typical spaces,
some exceeding 20,000 square feet, brokers said.
Keeping up with competing office space means using expensive
concrete polished floors, exposed, finished ceilings, glass
partitions and higher-quality LED lighting.
At 601 Lexington Ave., Boston Properties Inc. created two
prebuilt spaces on the top floors, creating large pantries with
stone counter tops and installing high-end stainless steel
appliances as well as marble floors in the reception area,
according to the company.
Landlords might be spending more now, but they figure that their
investment in high-end prebuilts will also give them the
flexibility to do shorter leases, serving multiple tenants leasing
the same space over time, said Andy Levin, senior vice president at
Boston Properties.
Write to Keiko Morris at Keiko.Morris@wsj.com
(END) Dow Jones Newswires
November 05, 2017 09:14 ET (14:14 GMT)
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