For today’s tenants, deals are driven by a new buzzword: Amenities.
While location still counts, a curated lifestyle often wows would-be tenants to sign on the dotted line. And when it comes to the number of amenities, owners have decided that bigger is better, and the more, the merrier.
“Tenants have been densifying, and you can’t sit at a small desk all day. You need a place to go, even for five or 10 minutes,” says Peter Turchin, vice chairman of CBRE, of the open-plan offices that pack people in.
Now, in-house amenities focus on amplifying break-like opportunities. “[The employees] have the mobility tools to be able to move around very efficiently, so this is a big part of the redevelopment being contemplated around the city,” Savills Studley’s Vice Chairman David Goldstein says. “It’s hospitality reinvented for office buildings.”
To add value and attract tenants, owners are giving up rentable space to create a “special story” through these amenity areas.
Brian Waterman, executive vice chairman of Newmark Knight Frank, says the owners are looking at lobbies and other nooks and crannies for amenity enhancements. “They are creating more ‘we’ space as opposed to ‘me’ space,” he says.
Firms saying sayonara to Midtown and moving to Hudson Yards are also providing a wake-up call for the owners of the buildings they are abandoning. That has prompted owners to start investing in their properties and make them special, says David Falk, tri-state president of Newmark Knight Frank.
To add some oomph to George Comfort & Sons and Angelo, Gordon & Co.’s 575 Lexington Ave., a midrise floor is being turned into a club with meeting rooms, a game room and outdoor space for functions. Says Falk, “They are investing a lot of money into an amenity area that will be a head-turner. It will be a gamechanger for the building.”
At 675,000 square feet, the Rudin Management and Boston Properties project, Dock 72 at the Brooklyn Navy Yard, has the space and capital to pump up the offerings.
“Smaller companies who are fighting for the same employees and talent as Google and Facebook don’t have the ability to provide the amenities that the bigger ones do,” says Michael Rudin, senior vice president of the family company. He hopes to attract firms of all sizes to the new dramatic structure.
With WeWork already signed for over a third of the building, its community manager will oversee the entire property and all employees will have access to its activities and events.
Boston Properties’ building at 399 Park Ave. has also been entirely reinvented. Not only are there new Park and Lexington Avenue lobbies and a new marquee, but a low-rise enlargement with a garden on top has also been created as an oasis in the sky. An available seventh floor has four terraces with an asking rent of $95 per foot.
“We are really looking to be the best renovation on Park Avenue,” says Turchin with regard to 399 Park. “The market is appreciating repositioned product.”
Smack in the middle of Times Square, the Durst Organization is spending over $140 million on improvements at 4 Times Square, with a large chunk targeted to transform the entire 45,600-foot fourth floor. Condé Nast’s former Frank Gehry-designed café is now run by Michelin-star chef Claus Meyer, with meeting rooms managed by Convene.
Sources say Vornado Realty Trust’s 2.52 million-square-foot monster One Penn Plaza, bounded by West 33rd and 34th streets between Seventh and Eighth avenues, is converting an entire 85,000-square-foot floor to house a cafeteria and other spaces earmarked for amenities. The building is also getting a new lobby in a major facelift and will be rebranded PENN 1.
“I have a major tenant looking hard at the building and this is making them pay attention,” confides one broker, who asked not to be identified. Vornado didn’t respond to requests for information.
Similarly, the Empire State Realty Trust (ESRT) has added numerous amenities at the Empire State Building, marketed as a campus for companies that include LinkedIn and Shutterstock. These include a new sky-high 67th-floor conference center, as well as a gorilla-sized lower-level health club and executive dining spot.
ESRT is currently designing a 4,000-square-foot lobby lounge for another of its properties, 1400 Broadway, which sits along the Broadway promenade between Times Square and Herald Square.
“It’s for a diversity of experience for the tenant work population,” says ESRT’s executive vice president, Thomas Durels. “We are seeing that the employees like the lounge experience and want to go to a different environment and sit or eat with friends or do their work.”
At the GM Building at 767 Fifth Ave., a lobby newsstand was replaced with Little Collins, a café renowned for its avocado toast. “We really tried to upgrade to match the nature of the tenancy,” Turchin says.
Downtown, One New York Plaza created a dining and retail experience below grade. “It’s a huge building and there isn’t a ton of retail in the area,” Turchin explains. Currently, the rear of its huge lobby that faces New York Harbor is being transformed with seating.
Says Goldstein of Savills Studley, “Owners want to give people not only reasons to come to the facility, but stay there and have a productive time.”
Smaller companies who are fighting for the same employees as Google and Facebook don’t have the ability to provide the amenities that the bigger ones do.
- Michael Rudin, senior vice president of Rudin Management
But Goldstein warns that it is still unclear which amenities will provide the most draw and drive the most bang for the buck. “Any developer that has a block of space will have to come up with an innovative way to stand out,” he adds.
Peter Riguardi, chairman and president of JLL, has already seen leases for tenants that want to bring dogs to work. Tails are often wagging at WeWork’s 18th Street headquarters, for instance.
So far no one has installed a doggy day spa but Goldstein laughs, “It’s only a matter of time.”
Not all amenities are equal, however, and one tenant’s amenity might turn off a company whose employees have a different lifestyle and culture. Says Turchin, “It’s not that one amenity fits everyone, but the building must ensure that the amenity caters to the tenancy.”
Savvy NYC properties are adding and promoting these fun features to woo employees.
Signs of the times
Think of the iconic MetLife sign on 200 Park Ave, the one for Salesforce at 1095 Sixth Ave. or even an understated small brass sign in a lobby that directs visitors to a company’s private elevator bank. The one thing all have in common? This branding is negotiated by tenants.
But in some cases, signage — from a competing brand or any brand at all — can make or break a deal.
“I have walked clients through a prominent Park Avenue building, and the signage there is a dealbreaker for some,” says Ben Friedland, executive vice president at CBRE, who declined to name the building.
“Many tenants don’t want to be in a building with … signage for a company they don’t want to be associated with, or one that brings media attention,” says Peter Riguardi, chairman and president of JLL. “Where there are signs, tenants are also strict about being someplace with a competitor’s sign.”
One prominent signage opportunity right now is at Panorama, the new name for the former Jehovah’s Witnesses facility in Brooklyn that sits along the East River. The “WATCHTOWER” letters were removed in December, leaving plenty of skyline for another proclaiming the name of a major tenant.
“There is a huge opportunity not only for that building, but for part of Brooklyn Bridge Park,” says Riguardi. “Can you imagine it being your company name as you drive over the Brooklyn Bridge? How much is that worth?”
The great outdoors
Being near a park with great views is very attractive to companies. “People like to see green,” says Brian Waterman, executive vice chairman of Newmark Knight Frank. That’s one reason 220 Fifth Ave. on Madison Square Park is leasing up its 10,000-square-foot floors.
The ability to have fresh air and green space led Himmel + Meringoff Properties to build a private roof deck at 6 E. 32nd St. for the tenant that takes the 30,000 square feet right below. “It will be spectacular outdoor space,” says co-managing partner Leslie Himmel.
New buildings along the High Line in the Meatpacking District are even signing leases at rents close to $200 per foot.
For example, with views of both the High Line and the Hudson River, upcoming 40 10th Ave. — also known as the Solar Carve, for its orientation toward the sun — is being developed as an office location to attract and retain millennials and executive-level talent.
Jared Epstein, vice president of Bobby Cayre’s Aurora Capital, which is developing the property with its partner, Neil Bender’s William Gottlieb Real Estate, says, “Having outdoor space and landscaped space, plus views of the High Line and the river, along with the beautiful architecture inside, is very appealing to these tenants. It relaxes your mind and opens it to creativity.”
Get a workout at work
To keep employees in tip-top shape, buildings of all sizes are installing gyms and fitness equipment.
The Empire State Building, for example, installed a fittingly massive underground workout facility, only open to tenants, that has plenty of lockers, showers and high-end machines.
In Midtown, the Park Avenue Tower at 65 E. 55th St. has dedicated its entire concourse level to amenities, with a high-end fitness center overseen by Fitlore. Corporate wellness programs, group yoga and cardioboxing, along with personal training plus laundry service for executives, round out the list of offerings.
A few blocks away, the boutique building at 34 E. 51st St. lures health-conscious tenants with a gym, a golf simulator and storage for golf clubs.
Across the Hudson in Jersey City, Bentall Kennedy’s 525 Washington Boulevard in Newport leased a floor to Club Metro, which will jam-pack 16,000 square feet with a kids’ club, a juice bar, a tanning salon, a cycling studio, a golf simulator and personal training. “The office building wanted a best-in-class operator to amenitize the office space,” explains Jason Gerbsman, managing principal of Hudson, who repped Club Metro.
A cyclical commute
As bike lanes have expanded all over the city, more pedal pushers are combining their daily commutes and heart-pumping workouts.
That’s one reason bike rooms and showers are “very, very important,” says Riguardi — who happens to be a cyclist himself.
Since 40 10th Ave. sits opposite the popular cycling corridor along Hudson River Park, it will have a beautiful locker room, showers and a bike room as key amenities, says Epstein of Aurora Capital. “You can store the bike, take a quick shower and go up to work,” he adds.
In a bit of two-wheel upmanship, Dock 72 at the Brooklyn Navy Yard will not only have a bike room, but also a bike valet and a Citi Bike rack as part of its 70,000 square feet of indoor and outdoor, public and private amenity spaces.
In addition, Dock 72 has a ferry dock at its doorstep, with service connecting to Manhattan and Queens. Bikes are allowed on board, making cycling from anywhere a literal breeze.