Spanning the entire island of Manhattan along an east-west axis, Midtown is the largest central business district in the United States at a size of four square miles.
Separating Upper and Lower Manhattan (or Downtown as the latter is also known) this band of New York encompasses neighbourhoods including Chelsea, Gramercy Park and the Meatpacking district and is one of the most high-profile real estate spots in the city. But it is also one of the most crowded.
Vacancy rates have fallen steadily over the past last five years – they stood at 8.9% after the first half of 2015 in Midtown according to the Real Deal. And things are tighter still in Midtown South – home to landmarks including Times Square – where the figure stood at 6.9%.
Rising rents and severe space restrictions have subsequently resulted in a gradual migration of occupiers, particularly those in the advertising and publishing sectors, to the island’s Downtown district.
Keith DeCoster, director of US Real Estate Analytics at Savills Studley, says: “Downtown has benefited from discounted rates, an abundance of larger floor plates and the dramatic improvement of its transportation network and retail offerings around the World Trade Center.”
But why such movement from those companies in particular? On top of cheaper rents, it all comes down to following the major players. Publishing icon Time Inc left its Midtown office to take 700,000 sq ft in Downtown’s Brookfield Place this month, and Conde Nast moved out of its famous Times Square HQ this time last year to take up 1.2m sq ft in 1 World Trade Center.
And it has been these sorts of major deals that have seen Downtown outperform Midtown when it comes to attracting major office relocations. The Lower Manhattan district has poached 14 large companies from Midtown and six from Midtown South since 2007. Midtown has only lured five major tenants in the opposite direction and Midtown South has yet to land a substantial Downtown tenant.
