NYC Market Update: Manhattan Construction Activity Still Slow

As of October, more than 20 million square feet of office space was taking shape in Manhattan, according to CommercialEdge data. New investments are still scarce in New York City, in light of ongoing uncertainties about the evolution of the global health crisis and, implicitly, the future of the workspace.

The vast majority of the projects that broke ground since the onset of 2021 represent redevelopments/renovations of older structures, with one exception. The 414,000-square-foot Urban League Empowerment Center in Harlem is the single ground-up project with a significant office portion that has gone vertical this year.

In July, KPG Funds signed a 99-year ground lease with Salvation Army at 132 W 14th St., a 57,478-square-foot building in Greenwich Village. The buyer has a history of engaging in acquiring and redeveloping old structures into modern-day office buildings. “The idea that office is dead in NYC is nonsense. Office is just being redefined in 2021,” Greg Kraut, KPG Funds co-founder and CEO said in prepared remarks.

Also in Harlem, a four-story former parking lot from the 1910s is undergoing repurposing. In May, affiliates of Park-It Mgmt Inc. have landed a $44 million construction loan for 160 West 124th St., an 89,000-square-foot build-to-suit medical office property. Mount Sinai Health System will occupy the 12-story asset.

In late October, Extell Development Co. announced that the company is developing its first medical office building on the Upper East Side. Designed by Perkins Eastman Architects, the 400,000-square-foot, full-block tower will rise 30 stories. The site consists of a ten-parcel assemblage, purchased gradually by Extell throughout more than a decade. The project is slated to break ground in the first quarter of 2022.

CommercialEdge covers 8M+ property records in the United States. View the latest CommercialEdge national monthly office report here.