NEW YORK CITY-Whether Midtown, Downtown, Uptown or the outer-boroughs, “relationship-driven” is how ABS Partners’ president and co-managing partner Gregg Schenker describes the company business. With more than six million square feet of managed property, the firm largely concentrates on the Midtown South submarket. In an interview with GlobeSt.com, Schenker describes why the Flatiron District, Union Square and SoHo are showing no signs of slowing down.
GlobeSt.com: What is leasing activity like at your buildings in the Flatiron District?
Schenker: Because the percentage of occupancy is so high when spaces come up for lease, we have more or less been able to hold the line on the terms we are seeking to achieve, and leasing has been very, very robust. In terms of the change in values that’s taken place over the last two or three years, work letters are less than they once were, rents are up significantly, the amount of downtime in-between tenant leases has decreased. We’ve been somewhat active on the retail front and we have a couple of very unique opportunities. We just moved a tenant from the ground floor of a space facing Union Square on 17th Street and Park Avenue South. The retail space was occupied by Rothman’s is now vacant. Rothman’s just moved last week a block north to 18th Street and Park Avenue South to another ABS property and freed up that very valuable corner. We are talking with a couple of tenants about creating a duplex store there where they can have a large ceiling lower-level combined with the corner store on the ground floor. We’ve seen significant activity on the space already. We have offers from a couple of tenants. There’s a bank that’s interested in the space. There were some food uses that inquired, but we don’t want a food use for that particular space because of the 300,000 square feet of office space upstairs. We feel a dry use would be better for the location. It’s cosmetics and a very high-end spa type use.
GlobeSt.com: What office trends are driving Midtown South?
Schenker: We’re seeing a lot of tech related businesses and creative types; tenants that really prefer to be in Midtown South to Midtown and Downtown because of lifestyle-related issues. They like the idea of more of a low-rise district with restaurants, shopping and many of them walk to work. We find that very often that the president of the firm lives nearby and wants a walk-to-work location. We continually see a lot of businesses in the small business sector.
GlobeSt.com: Would you say the high-tech/creative tenant boom is overheating in Manhattan, or will it get stronger?
Schenker: I don’t think it is overheating at all. I think New York is establishing its dominance as the tech capital of the world, anchored by Google at 111 Eighth Ave. and Apple just took space at 100 5th Ave. It’s just getting started for the Midtown South area, and it’s been nicknamed Silicon Alley. It’s in its early stages of growth.
GlobeSt.com: Are there any other neighborhoods besides Midtown South that you are excited about and see opportunities in?
Schenker: The area around Columbia University’s expansion campus is very, very interesting. The project going on there is going to be transformative. There are parts of Brooklyn that are very compelling because of the desirability for multifamily housing and the strength of that market. We are seeing a lot of young families today that would prefer to be in Brooklyn than in Manhattan, and it’s not just cost-driven; it’s lifestyle-driven.
GlobeSt.com: What’s your overall outlook on NYC multifamily?
Schenker: We believe that New York has been a bellwether market around the country for multifamily housing. We’ve seen very little growth in the housing market since the 60s. In 1960, the population in New York was about 7.7 million and in 2010, it is 8.1 million. At the same time, total housing units were 2.9 million in 1970 versus 3.3 million in 2010. Now the city is focused on rezoning areas that are no longer used for manufacturing, because our manufacturing base is essentially gone. Part of the plan for some of those areas is residential use. There is plenty of room for additional units to be added to the market in New York. When you travel anywhere around the world or around the country, young people want to be in Manhattan. There’s a very good outlook for the multifamily market in New York City, not to mention the financing that’s available to either build those projects or stabilize them in-place. In Brooklyn, we have an 85-unit project that we are going to be building with a development partner like others that we’ve built. It’s a joint venture with one of our clients and the Hudson Companies on Cayden Place in Kensington off Prospect Park. Because of the amount of equity going into the deal, there was no problem obtaining financing.
GlobeSt.com: In what other ways are you expanding your reach?
Schenker: We are continuing to build the leasing. In our offices in Manhattan, we have a retail leasing group, an office leasing group, an investment sales group and an owner/advisory group. We are continuing to grow those aspects of the business. We’ve got 70 people in the New York office now, and I think by the fourth quarter of this year, we would have added another 10, approximately.
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