New and completely reimagined buildings like those at Hudson Yards, the World Trade Center and Brookfield Place and new or completely rehabilitated boutique office buildings along the High Line in Midtown South offer the progressive workplace design, modern amenities and exciting retail atmosphere that millennials want. Such efforts are to make relocating to these buildings significantly appealing to Manhattan office tenants.

With virtually column-free spaces, these new buildings also offer companies a greater opportunity to densify with space reduction averaging 20%. Even though rents in these new buildings are higher, if tenants are paying rent on 20% less space, they can achieve significant savings.

Densification isn't just about fitting more people into a smaller floorplate. Open office plans with flexible spaces, cool amenities and room for interaction and sharing are seen as a way to keep employees engaged, help them enjoy being at work, encourage collaboration with each other so they can be more productive even with longer hours, and stay happier while at work.

To compete with these new buildings, landlords of older product are investing significant capital to modernize their properties, creating more modern, efficient space and adding new-age amenities such as food halls, lounge areas, conference and fitness centers and outdoor space.

Relocating used to be the more expensive option for tenants approaching a lease expiration after factoring in the cost of moving and building out new space. A few years ago, a relocating tenant would have to spend a significant amount of cash on the build-out of new space (above a tenant improvement allowance), furniture, wiring, legal and architectural fees, the move itself and more.

Today, many owners of both new and older buildings are so hungry for tenants that they are offering to cover most if not all of these costs through tenant improvement allowances and new building installations at higher values than the industry has ever seen, in addition to lengthy free-rent periods.

The financial incentives to relocate are now so compelling that renewing in place is no longer always the cost-effective solution. Depending on the structure and amenity offerings of the building, renovating existing space in an older building might not yield the same efficiency gains that a new space would. The renewing tenant, even after a complicated and cumbersome staged renovation, may still be occupying a higher square footage than would be necessary in a new building, resulting in a higher rent. In addition to a potentially more costly scenario, a company looking to renew and revamp their existing space is faced with the aggravation, time consumption and productivity loss of a gut renovation and remodel.

Now more than ever, there are tremendous opportunities to upgrade office space to a standard that attracts the best possible millennial employees and at the same time reduce real estate costs. It's a great time to be a tenant, but there are many options and variables to consider when navigating which real estate solution meets a company's business objectives to truly reap the benefits of the Manhattan office market.

Jeffrey Peck is the vice chairman of Savills Studley, commercial real estate services firm specializing in tenant representation. The views expressed here are the author's own.