What’s the next Flatiron District, i.e., the next trendy, expensive place to office in New York? It will be the once-gritty West 30s/Garment Center.
That’s what leading New York City real estate executives said in a new survey conducted by accounting firm Marks Paneth & Shron LLP (MP&S).
The greatest percentage of commercial property executives (24%) named the Garment Center/West 30s as the “next hot area where office rents will skyrocket.” The next greatest number — 17% — chose the Grand Central area, followed by Hells Kitchen/Far West Side, (selected by 15%) and downtown Brooklyn (12%), according to MP&S’s Gotham Real Estate Monitor, a survey of more than 100 top New York commercial real estate owners, managers, brokers, agents and other professionals in commercial property.
“Perhaps sooner rather than later we will see more upscale restaurants and retailers populating the Garment Center, which will in turn draw in up-and-coming executives in new, booming industries,” said William H. Jennings, Partner-in-Charge of the Real Estate Group at Marks Paneth & Shron.
Interestingly, only 11% of executives said the Financial District/World Trade Center/Battery Park City is the next hot area, despite the Freedom Tower and Fulton Center developments under way. And only 8% chose the white shoe “Plaza District” in northeast midtown.
Which major development projects will have the biggest, positive impact on property values in their vicinities?
Only 8% of commercial property executives said the Freedom Tower (World Trade Center redevelopment) would have the biggest impact on surrounding property values. The largest group — 44% — named the planned Hudson Yards project on the far West Side in the 30s. A quarter said the Long Island Railroad access to Grand Central will be the project with the biggest commercial property value impact, and 24% said it will be the Second Avenue Subway.
Relatedly, real estate executives believe Hurricane Sandy has had a significantly negative impact on commercial real estate in Lower Manhattan. Most — 56% — said commercial property values there will either be permanently lowered or at least lowered in 2013 as a result of the storm and its damage. Many (19%) said existing commercial tenants will look to relocate from Lower Manhattan when their leases expire, and nearly half (47%) say property owners will be forced to lower rates and offer incentives to retain existing tenants.