Surveys

What Are the Most Pressing Issues Facing New York Now?
01/30/2008
What is the greatest threat to the New York you love?
11/30/2007
What does it cost you to live here?
11/08/2007
Can one person change the city?
10/22/2007

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Midtown Rents - A Bargain?

Friday, February 22, 2008, 11:33am
Submitted by Jonathan Sills

Can renting here really be a bargain?
In shocking contrast to our recent blog about Midtown commercial rents getting so high that restaurants were feeling the pinch and closing down (Tuscan Square - the Pino Luongo cafe/restaurant in Rock. Center did close, by the way), according to experts at Cushman & Wakefield Midtown’s office rents are lower than all of its major global competitors, including London, Paris and Tokyo, making it “a bargain” compared to these cities. So, where exactly does the truth lie?

Well, according to Metro NY,

"Although Manhattan’s office rents rose last year by nearly 30 percent, it still moved down a notch from last year’s rankings, placing 10th on the global real estate service firm’s 2008 “Office Space Across the World” survey."

"Rent, taxes and utility costs were studied to combine for an occupancy cost. New York’s occupancy cost is $100 per square foot compared with first-place London’s $312."

However, this comparison is a false one. In London, paying for your office space in the local currency would cost you around 150 pounds (sterling) per foot which, seeing as businesses there earn pounds, not dollars, ought to be compared on a numerical basis (as opposed to a currency exchange rate basis) to New York. Doing so, (150 things in London vs. 100 things in New York) reveals that office space in London is around 50% more expensive than New York - a significant margin, but much less than the 300% quote in Metro NY.

Now, as with the issue of growing international tourism, if you're an international business looking for office space in New York, it might well appear to be a bargain compared to other global cities, because you have the luxury of choice and a stronger foreign currency to buy with. But, what happens when you're a local company paying in US dollars? Surely, herein lies the rub? Perhaps the better comparison is between Midtown Manhattan rents and those in center city business districts across the country rather than across the world?