New York is Catching Up With London in Office Space Construction
There has been a lot written recently about the growing London office space market and with nearly 9 million sq. ft. under construction it’s hardly surprising. But a recent report by CBRE highlights that Manhattan is catching up with London. The report also says that new construction over the next 5 years is likely to equal or even exceed London.
However, New York still leads the way in the size and scale of new developments across the city. In an interview with the New York Posts, Steve Cuozzo, CBRE vice-chairman Stuart Eisenkraft commented, “The Shard, a mixed-use skyscraper designed by Renzo Piano, certainly is an instant London icon thanks to its 1,012-foot height. But leasing has been painfully slow for its mere 600,000 square feet of offices.”
Eisenkraft goes on to point out that London construction will accelerate up to 14 million sq.ft. by 2018. But in stark contrast a handful of New York projects already add up to almost the total London office space under development. Most notably, those at 30 Hudson Yards that we reported on recently, which includes Time Warner’s new home, as well as the new projects at 3 World Trade Centre, Bryant Park and Soho Square.
Despite New York’s undeniable dominance in the office space sector with nearly 450 million sqft of space, London, with less available space attracts much higher rents than New York. There has also been some concern about the ageing condition of much of Manhattans office space. This is heightened by the relatively young age of many of London’s recent developments like the Cheesegrater, Heron Tower and More London. As a result there have been calls for more construction projects to modernise current stock and to ensure that Manhattan can compete with London in the future.
As New York moves ahead there has been good news about the wider US office market, with healthy annual increases according to Cassidy Turley chief economist Kevin Thorpe. In a recent report he commented, “The single most important factor for the office sector is employment,” Thorpe said. “Businesses have been creating well over 200,000 net new jobs per month for several months now, the highest stretch of job creation in almost 15 years. About 30% of those new jobs require office space, so this clearly creates a stronger economic backdrop for the office sector.”
Dan Soffer the US Vice President at New York’s Search office Space commented, “It’s interesting to see how New York construction is stepping up to meet the growing demand for office space as the US economy improves. We are receiving a growing number of enquiries for new and refurbished space this year. We have also noticed that average rents continue to increase as confidence grows”.
Both cities understand the need to modernise their office portfolios. Attracting tech, bio and investment businesses to the cities is crucial for future economic growth. As construction continues to grow New York has London in its sights and is set to take the lead in the years ahead.