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The Office Market Is Hyperlocal—and Status-Obsessed
Tuesday, March 25, 2025
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Office envy: NYC’s current, lopsided office market provides an interesting view into just how bifurcated demand for office space has become.
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There has been talk of a “bifurcation” in the office market for some time. While the overall market has struggled, certain offices—particularly those in the best buildings and prime locations—have seen strong leasing activity and even rent growth. This week, The Wall Street Journal shed light on exactly where that bifurcation lies and what today’s market considers to be top-tier locations.
New York City has seen relatively strong office demand compared to other U.S. cities, but that demand hasn’t been evenly distributed. One part of town—and one street in particular—has experienced low vacancy, high renewal rates, and rent growth. Park Avenue offices remain in high demand, even while nearby corridors like Third Avenue are offering steep discounts.
The reason behind Park Avenue’s strength is notable. One factor is the significant investment building owners in the area made post-pandemic. When major tenants began relocating to newer developments like Hudson Yards, Park Avenue landlords responded with major upgrades to their buildings and amenities.
Another reason Park Avenue is thriving is its concentration of financial firms. Being located near these institutions not only lends a sense of gravitas to neighboring tenants, but it also creates a “one-stop shop” for similar companies. “It makes it easier for investors when they’re coming to see us that they can go up and down that stretch of Park Avenue,” said Shai Vichness, chief financial officer at Churchill Asset Management.
In today’s office environment, where proximity is critical, demand has become hyperlocal. This is good news for landlords in long-established office districts, but it poses a challenge for those hoping high-tech, new buildings will draw tenants to emerging areas. New York City may be one of the most unique office markets in the country, but the polarization in demand highlights how proximity and prestige still carry weight—even when seemingly better options exist elsewhere.
Overheard
2 CRE datapoints:
1) Jon Gray ($BX CEO) said at Piper this week that “the CRE downturn is over” and
2) 3 NYC trophy office buildings secured over $3.8B in CMBS loans in February, signaling renewed investor confidence and a sharp rebound in the commercial real estate debt market.— RiverRoadPartners (@partners_road)
6:30 PM • Mar 23, 2025
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