There are approximately 28 million small businesses in the U.S. that have generated over 65% of the net new jobs since 1995, but very few of them are based out of the giant office buildings in New York City. New York City is known globally for massive skyline buildings, but the recent influx of new buildings offering office space in New York City is putting a strain on existing executive offices for rent in the bustling metropolis, according to the business news site BusinessInsider.com.
“Unless there is some big wellspring in demand and unless there’s a bounce-back in the core tenants ? the financial and legal sector – we don’t see where the demand is going to come from,” said Keith DeCoster, director of U.S. real estate analytics at Studley, a unit of Savills Plc.
The issue at hand has to do with projects that developers have been working on for some time, but are being completed or expected to be in the next year or two. A lot of the new executive office space for rent is going up in Lower Manhattan and on the West Side.
Some companies such as Time Warner Cable, Conde Nast, News Corp, and L’Oreal have already moved, or made an agreement to relocate to the new executive offices for rent at the new developing World Trade Center complex downtown, or the Hudson Yards district in the West Side.
Estimates have found that by the end of the decade New York City will see more infrastructure development than it has in the last three decades. About 18 million square feet of new office space is expected to be built in that time frame.
It’s not a good sign for the older players in the industry as there is already plenty of executive offices for rent in existing buildings. Realtor Savills Studley says there are a lot of buildings currently struggling with “empty building syndrome,” which is defined by tenant vacancy rates of 75% of higher.
It remains to be seen what these landlords will do to combat the current struggles, but some might have to start leasing space out in a much more flexible manner, similar to the temporary office space industry. By allowing people to rent by the day, week, month, etc. they could find opportunities to fill space in the meantime while they search for more permanent clients.