After its successful IPO a couple of weeks ago, Twitter is in the news again with reports that the microblogging site is close to leasing nearly 100,000 square feet at Edward Minskoff’s Fumihiko Maki-designed, LEED Gold-hopeful 51 Astor Place. The deal would be the second tech sector transaction at the 12-story, 400,000-square-foot tower: 1stdibs, the online auctioneer of high-end vintage items, signed a 15-year, 42,000-square-foot lease last month for the entire third floor.
That deal was in the $80s per square foot, rising into the $90s over the term of the lease. Now, according to Crain’s, Twitter appears prepared to commit to a similar long-term lease at rents in the $90s per square foot, giving 51 Astor Place a high-profile, trophy, brand-name tenant. And, of course, it would be a major milestone for the developer, Edward Minskoff, who almost landed Facebook as 51 Astor Place’s anchor tenant last year until the social media giant opted for a long-term deal across the street at 770 Broadway.
Twitter’s serious interest in 51 Astor Place raises some important points about brand-new, Class A office space in New York City, particularly in the Midtown South submarket. At least until now, large, trophy tech sector tenants – like Facebook, Yahoo!, BuzzFeed, and others – have avoided new construction and its modern, sleek design focus, preferring to convert lofts in older pre-war buildings. Indeed, as Dan Geiger also points out in Crain’s – there were concerns that 51 Astor Place wouldn’t be the right fit for tech sector tenants (“The building’s conspicuously slow start prompted worries that the building’s state-of-the-art space and glass and steel aesthetic was not catching on among tenants who are flocking to midtown south for its classic architecture and turn of the century loft spaces,” Geiger writes).
But piecing large blocks of contiguous office spaces together in Midtown South remains a significant challenge for tenants given the current market climate. And (of particular interest for us here at gbNYC+, of course) the environment-friendly ethos and advanced building technologies implemented both at 51 Astor Place and across other brand-new Class A office towers remains attractive to tenants with younger workforces. Developers and landlords are increasingly recognizing this as a trend and and have consistently pointed to it when justifying LEED- or other third-party certification efforts for their projects’ green building components.
So in that context perhaps it’s not surprising that IBM and Cisco are also reportedly looking at 51 Astor Place. And earlier this week The Real Deal reported that Mashable is also on the hunt, for 40,000 to 60,000 square feet of space in the nearby Gramercy Park or Flatiron District submarkets. These types of looming transactions should be a reminder that changing demographics, coupled with the explosive growth of the tech sector, will continue to have significant impacts on New York City’s commercial real estate market and green building practices in the months ahead.