Iit’s lunch time At One Vanderbilt, a new office tower jutting out of Midtown Manhattan. The building’s spacious basement kitchen hums as bustling workers in white chef’s uniforms pass in and out through swing doors.Upstairs, the lounge overlooking Grand Central serves delicious salads and soups; the sit-down restaurant offers Foie gras, seared scallops and more from celebrity chef Daniel Boulud. No soggy al-desko sandwich in sight.
In developed countries, the commercial real estate industry is in dire straits. Tenants have embraced working from home and are scaling back appropriately. In cities such as Hong Kong, London and Paris, vacancy rates are at record highs. In another indicator of the gloomy mood, global office investment fell by 42% last year, while overall real estate investment fell by 28%. A recent paper by New York University’s Arpit Gupta and Columbia University’s Vrinda Mittal and Stijn Van Nieuwerburgh predicts that New York office buildings could lose nearly 40 percent of their value, or $453 billion, between 2019 and 2029.
Yet One Vanderbilt, a 93-storey skyscraper topped by a gleaming “Hall of Light” observatory (pictured), is one of many new trophy properties and refurbishments that offer something akin to an elite private members’ club interiors and services.Tenants in Manhattan reportedly signed 6.1 million square feet (566,709 square meters) of high-end office space deals last year, double the previous year jll, a real estate company. This luxury shift was underway before the pandemic, but has accelerated as companies find themselves competing with home offices. If a company only needs the space for half its employees each day, it can pay more per square foot.
So the picture at the top of the commercial real estate market is very different from the misery at the bottom. While New York has the most luxurious new builds, lavish offices are popping up in other cities around the globe. In London, the owners of 105 Victoria Street are adding 30,000 square feet of green space – equivalent to 14 tennis courts – including an urban farm and a “walk and talk” track. Merdeka 118, a skyscraper under construction in Kuala Lumpur, will have one of the tallest observation decks in the world.
Before the pandemic, desks made up about 60 percent of office space, according to real estate consultancy Cushman and Wakefield. Things have changed a lot. New and refurbished offices dedicate half of their space to workstations and increase the share dedicated to amenities from 5 percent to 20 percent.Meditation rooms, bike storage, showers, outdoor spaces and more are now open etiquette.
The result is an arms race in the topmost markets, especially in the most competitive cities. Many new luxury offices offer concierge services — some poached hospitality teams from places like the Four Seasons hotel chain — and rooftop bars serving high-quality drinks. They usually have eye-catching entrances. The lobby is located at 425 Park Avenue, a three-story office building on the corner of One Vanderbilt. The Spiral is a new tower with tree-lined terraces on every floor and a lobby filled with signature scents and soothing music.
The ambition is to make life as comfortable as possible for employees – not just to get people back into the office, but to help recruit in a tight labor market.Tenants at 50 Hudson Yards, home to investment firm BlackRock and social media giant Meta, have access to a helipad and are five minutes from John F. Kennedy International Airport for the price of an Uber SUV. Additional offices offer services such as pet care, babysitting and dry cleaning. Landlords are also eager to furnish old offices.this General Motors The building, a 55-year-old tower overlooking Central Park that was once owned by the Trump Organization, was recently renovated and includes a bar, lounge and fitness center with spinning bikes and a yoga studio.
However, the modern worker is not just looking for luxuries. They also want to have a conscience. Therefore, green buildings are becoming more and more popular. For landlords, these have the dual advantage of attracting higher rents and a hedge against obsolescence as countries look to meet their net-zero carbon targets. New energy efficiency requirements for buildings in England and Wales mean more than half of London’s office buildings could be out of service by 2027. By 2030, buildings in Europe will need to get about half of their energy from renewable sources. Cleaner air, minimal carbon emissions and better insulation are commonplace in new types of offices. One Manhattan West, another tower in the Hudson Yards development, is powered entirely by renewable energy. Like many developers, the tower’s owner, Brookfield, aims to achieve net-zero emissions by 2050.
However, there is one problem looming over the luxury boom, and it’s a big one. What would happen to the market if economic conditions deteriorated? After the global financial crisis of 2007-09, luxury buildings were not hit as hard as their more humble rivals, but the whole industry was affected. In London, prime office rents in Q3 2009 were 35% below their 2007 peak.Owners of luxury mansions today must hope Foie gras Next time a high-tech gym will protect them. ■
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