commercial real estate: in focus
Hudson Square: Home to Creative Industries…

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One of the most vibrant commercial business districts in Manhattan over the past few years has been the Hudson Square market. The neighborhood boundaries are Hudson River to the west, Sixth Avenue to the east, Canal Street to the south, and 14th Street to the north. It is a business district that has attracted many of the top creative tenants in the city.

The influx of advertising, media, and more recently technology and fashion tenants began in the late 80s when creative companies were looking for inexpensive office space as an alternative to the high rental rates in the Midtown business district. Up until that time the area was known as the printing capital of Manhattan since printers occupied the large majority of buildings in the market. As Midtown tenants came into the area looking for inexpensive rents, landlords began converting their properties from industrial to office use, kicking out printers as their leases expired. By 1999, about 65% of the market consisted of printing companies; today there none. The majority have relocated to the outer boroughs of New York City where rents are substantially lower. Presently, the Hudson Square market has an outstanding roster of creative companies that call this area home, companies such as Horizon Media, Omnicom, Penguin Books, City University, Viacom, CBS Radio, Edelman Public Relations and most recently the fashion company, Tony Burch. While rents have increased dramatically over the years, creative tenants still choose to make Hudson Square their home because of the unique characteristics of these converted industrial buildings and the neighborhood. The individual floors in these properties typically have high ceilings and large operable windows which allow plenty of light to come into the space. Floor sizes of up to 60,000 square feet in some properties allow for efficient layout of office space.

The neighborhood is in many ways the ‘anti’ midtown. The area never seems to be too congested with automobile or pedestrian traffic and building heights, typically ranging from 8 to 15 stories, contribute to the neighborhood feel of the area. While the retail component in the market is still growing with new upscale stores, SoHo is located just across Sixth Avenue, offering an abundance of shopping and great restaurants. Subway access to the market is via the 1, A, and C trains.

While rents in Hudson Square are still considered a bargain when compared to rents in Midtown, the market has seen one of the largest increases in rents of all the Manhattan business districts, including the ‘hot’ Midtown South market. Prices for office space range from the high $30s to the mid- $50s per square foot, which will typically get a tenant a $40.00 cash contribution from the landlord toward building the space and 4 to 6 months of free rent once the tenant moves in. Finding suitable space however, is not a simple matter with the office vacancy at a low 6%, one of the lowest of all the business districts in Manhattan. The uniqueness of this office market certainly makes it poised for continued growth into the future.

Peter Shakalis is a Director at Colliers International NY LLC

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