Last spring RFR Realty announced it would lease the roughly 53,000-square-foot office component of its newly acquired 875 Washington St. to the Soho Works coworking company.
The move underscored the Meatpacking District's evolving reputation as a destination not just for high-end retail, nightlife, swanky hotels and luxury condos with High Line views but for office tenants as well. Brokerage Jones Lang LaSalle delineates the district's boundaries as spanning from the Hudson River to Eighth Avenue between Gansevoort and West 16th streets.
The evolution really kicked in about a year before, when Google acquired Chelsea Market, incorporating the 1.3 million-square-foot-plus monolith into its plans to more than double its city employee count to 14,000.
At the same time, developers added nearly 1.1 million square feet of office space to the neighborhood between 2015 and 2019, said Craig Leibowitz, senior director of New York research for JLL.
Office rents also have increased in the area. The average asking rent for Class A space—which is much of the Meatpacking's stock—went from about $49 per square foot in 2010 to $88 per square foot in 2018. It now stands at around $89, according to CoStar. Some office rents command more than double that, and the neighborhood's average at the end of last year was running more than $20 per square foot ahead of Midtown South overall, according to JLL.
There are signs, however, that everything office-related in the enclave will not always march upward. The leasehold for a trio of buildings—where penthouse office space went for $200 a foot—is now asking $75 million less than it did when it was last unsuccessfully on the market in 2018.
Whatever happens, the Meatpacking's traditional real estate strength—retail—appears to remain particularly strong compared with the rest of the borough. A Real Estate Board of New York report in the fall showed average ground-floor Meatpacking retail rents were up 14%, to $345 a square foot, from the same time in 2018. Such rents declined in 11 of the 17 Manhattan corridors the trade group tracks
Correction, Jan. 31, 2020: An earlier version of this story incorrectly stated that Google expanded its New York City presence to nearly 20,000 employees. Google expanded its presence to 14,000 employees.
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January 31, 2020 at 07:00PM
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Meatpacking District evolving into hot spot for office tenants - Crain's New York Business
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