by Brianna Crandall — November 5, 2014—With premier media company Condé Nast moving its global headquarters to One World Trade Center (1WTC) the beginning of November and opening the city’s tallest building for business after 8 1/2 years of construction, the developers also released a Cushman & Wakefield analysis showing the volume of pre-leasing at 1WTC is nearly double that of its closest competitor.
The global real estate services firm examined the seven largest speculative office buildings to open in Manhattan’s Downtown and Midtown districts since 2006 and found that average occupancy rates stood at 36.8 percent on the day the buildings opened.
The tallest building in the Western hemisphere, the 3.0-million-square-foot One World Trade Center ranked highest by far in terms of sheer volume of opening-day occupancy among buildings in the analysis. 1WTC to date has recorded 1,757,082 square feet in total leasing, or 57.8 percent of the building’s rentable office space. This square footage represents 180 percent more occupied space than that pre-leased upon the opening of the second-fullest of the other properties analyzed, 4 World Trade Center, putting it in second place for the group.
Overall occupancy levels ranged from 0.6 percent to 65.7 percent across the seven buildings when their doors opened. The buildings themselves ranged from as large as 3.0 million square feet to as small as 295,824 square feet. In a finding that may surprise many, three “spec” office properties opened with occupancy levels at 3.5 percent or lower.
The office tower at 505 Fifth Avenue ranked first in occupancy percentage, at 65.7 percent, when it opened in 2006. However, with only 295,824 square feet of total rentable space, 505 Fifth Avenue is the smallest property surveyed. A total of 194,257 square feet had been pre-leased at the time of the opening. The property is now fully occupied.
“The data show that developers who undertake speculative Manhattan office towers over build-to-suit projects, have a natural expectation that a significant percentage of leasing may occur after the building opens,” said Tara Stacom, executive vice chairman of Cushman & Wakefield.
“One World Trade Center is one of the few modern Manhattan spec buildings to have approached 60 percent leasing prior to opening, a testament to the power of its design, construction, and globally recognized address. While we see that industry-leading developers often take a strategic and long-term approach when it comes to lease-up timetables for spec office towers, One World Trade Center has exceeded the norm.”
Following 1WTC, the 2.0-million-square-foot 4 World Trade Center ranked third in occupancy level when it opened for business last year, with 48.8 percent of its space leased, equaling 975,828 square feet. The property is presently 54.6-percent occupied.
Coming in fourth on a percentage basis, 250 West 55th Street — a 896,000-square-foot property — opened at 47-percent occupancy in 2013, with 420,731 square feet in pre-leased space. Present occupancy is 74.6 percent.
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Opening day lease-up percentages then take a major drop for the last three properties, notes C&W. Ranking fifth — at 3.5-percent occupancy upon opening — is 7 World Trade Center. The 1.7-million-square-foot tower — now 100-percent occupied — had signed only 59,275 square feet in leases when it opened in 2006.
The sixth-emptiest “spec” building is 510 Madison Avenue, which opened in 2009 at just 3.3 percent occupancy. The 350,000-square-foot office building, with only 11,500 square feet pre-leased upon opening, is now 95.2-percent occupied.
Ranking last in opening-day, lease-up ratio — at 0.6 percent — is the 1,056,851-square-foot 11 Times Square. When the tower began operations in 2010, it was virtually empty, with pre-leasing totaling only 6,600 square feet. The property is now 79.4-percent occupied.
