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Class Warfare Wages in NYC Office Market

NEW YORK CITY—The gulf between Class A, B and C rents is not nearly as large now as it was back in the third quarter of 2008 when the disparity between Class A and C space was $40.92-per-square-foot.

By John Jordan | johnjordan | Updated on May 15, 2017

Since 2012 leasing in B and C buildings are up 81.9% and nearly 50% respectively, while A product has enjoyed a more modest 33% gain in leasing volume during that period in New York City. Since 2012 leasing in B and C buildings are up 81.9% and nearly 50% respectively, while A product has enjoyed a more modest 33% gain in leasing volume during that period in New York City.

NEW YORK CITY—Due to a variety of factors, including a heightened preference by technology, advertising, media and information services firms for Class B and C space in Manhattan, the warfare among building classes has heated up here.

According to a “Behind the Numbers” report by Colliers International, the rent gap between the building classes (A, B and C) has narrowed. “Strong leasing by TAMI tenants in B and C product has begun to alter long held conceptions of building class in Manhattan,” says Craig Caggiano, executive director, Colliers International New York. “Many Class B buildings, now in high demand from TAMI tenants, have undergone significant capital improvements and trade at a premium to Class A assets.”

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