Rejecting the Cubicle for an Expanse of Space

By C. J. Hughes, The New York Times | May 19, 2015

In the era of the coffee-shop office, where a bit of countertop can be enough room from which to run a business, some tenants in New York are clamoring for a very different kind of workplace: one that spans a cavernous 100,000 square feet or more.

Call them “superwides,” the horizontal equivalent of the supertall high-rises sprouting across Manhattan. Spreading out on a single story and usually having minimal walls, these offices are luring ad agencies, financial firms and magazine publishers, who say that employees are more productive when they intermingle on the same floor.

But because block-length buildings that can offer this kind of volume are rare, and since new skyscrapers tend to be narrower, the market for superwides has become ultratight, according to brokers, tenants and landlords.

“Large floors are absolutely in demand,” said Duncan McCuaig, a senior vice president at Brookfield Property Partners, which owns two of the dozen or so properties that offer office spaces like this, at 450 West 33rd Street and 225 Liberty Street. “And right now there is very little of this product in the city.”

Evocative of the trading floors of investment banks, but also popularized by Internet companies, these voluminous spaces are vastly superior to the older type of workplace, with cubicles and corner offices, said Adam Kansler, a managing director of Markit, a financial data company. After a two-year search, Markit signed a lease this spring for a full-floor 139,000-square-foot space at 450 West 33rd Street, at 10th Avenue in the Hudson Yards neighborhood.

Mr. Kansler considered leasing a few floors connected by internal stairs in an office tower. But as interconnected as that layout might be, he said, it would not offer enough chances for employees to bump into one another and exchange ideas.

“There’s something that gets lost” when a company is on multiple floors, he said. “You don’t get the same random moments of seeing someone from across the way, hearing that they’re working on a project, and saying, ‘Oh, I’m going to stop by.’ ”

The move, which will allow Markit to combine its two existing locations in Manhattan, at 620 Eighth Avenue and 101 Park Avenue, will be completed in 2016. Mr. Kansler declined to discuss the terms of his lease.

But people knowledgeable about the building, a 1969 former warehouse for E.J. Korvette department stores whose lower walls slope outward, said the asking rent for Markit’s space was about $70 a square foot. Over all, the average asking rent for top-of-the-line space in the first quarter of 2015 in the Midtown submarket, where 450 West 33rd is found, was $86 a square foot, according to Savills Studley.

Undergoing a $200 million renovation, the building, being renamed 5 Manhattan West, also recently signed JPMorgan Chase, which will take a full floor, and R/GA, an ad agency, which will take a floor and a half.

Aware that superwides are a hot commodity, Brookfield recently relocated a tenant from a portion of the seventh floor to another part of the building to allow another full-floor column-lined space to be marketed to a single tenant, Mr. McCuaig said.

That floor, though the same size as Markit’s, is listed at $85 a square foot, which brokers say shows how the intensity of demand over the last few months has put pressure on prices.

Tenants looking for superwides, which dwarf the 57,600-square-foot size of a football field, have few options. At 620 Avenue of the Americas, at West 19th Street in the Flatiron district, for instance, several floors sprawl across 120,000 square feet. But all are leased, to tenants like Spotify, the streaming music service, and Cole Haan, the shoe company, said RXR Realty, its landlord.

A similar occupancy rate is found at RXR’s Starrett Lehigh Building, a full-block property in West Chelsea where the largest floors sweep across 160,000 square feet; tenants there include McGarryBowen, an ad agency, and Tommy Hilfiger USA, the fashion company.

Time Inc. also recently went hunting for plus-size floor plates and found them at 225 Liberty, the Brookfield building, where its 700,000 square feet includes six entire floors. The smallest of those floors is about 110,000 square feet, a Brookfield spokeswoman said. The magazine publisher will move from Midtown this year.

But the most prominent superwide is probably 111 Eighth Avenue, a full-block structure at West 15th Street in Chelsea, owned by Google, the search engine giant. The largest spaces in the older Art Deco building span 211,000 square feet, brokers say, but even the skinnier top floors are 125,000 square feet.

“It’s not that developers don’t want to build buildings like this today. It’s just that the land doesn’t exist,” said Jeffrey I. Peck, an executive managing director of the Savills Studley brokerage, who was involved in the Markit deal.

He pointed out that new office spires in neighborhoods like Hudson Yards and the financial district mostly offer floors of just 30,000 to 50,000 square feet. And, Mr. Peck said, there’s low turnover in the superwide buildings, which tend to be surviving industrial properties.

“The tenants that lease floor plates of this size tend to be more stable, and once they have it, they don’t generally give it up,” he said.

For all their apparent upsides, wide-open offices are not appreciated by every worker. Adam Stoltz, a principal at HOK, the architecture firm, said that if an office were “100 percent open, it would be a miserable experience.”

The ones that work best, he said, install some conference rooms for privacy; they also muffle noise. And, putting functions like human resources in distinct enclaves, away from prying eyes, is important. “You really need to define neighborhoods within the space,” said Mr. Stoltz, whose clients in the area include Morgan Stanley, Horizon Blue Cross Blue Shield of New Jersey and WPP, an advertising holding group.

The spreads do seem to be catching on, if slowly. Open-seating offices, which would include some of the superwide type in New York, make up about 8 percent of all offices, according to a recent report from the International Facility Management Association, a trade group. In 1997, that number was 6 percent, the report said. But the cubicle style is still dominant, with 60 percent of the market in 2010, according to the data.

Still, Mr. Stoltz said, the number of tenants that have incorporated at least some aspects of open-office plans, like long tables with people sitting side by side, is far higher, about 75 percent of the country’s workplaces. “It’s all about serendipitous interaction,” he said.

Correction: May 19, 2015
An earlier version of this article misstated the area of Manhattan where 450 West 33rd is found, and also misstated the average asking rent for top-of-the-line space in that area. It is Midtown, not Midtown South, and the average asking rent is $86 a square foot, not $67. Earlier versions of two picture captions also were in error. In the first image, only the two men at left are representatives of Markit; the two at right are brokers. Also, the space Markit leased is on the fifth floor, not the seventh, and it is 139,000 square feet, not 130,000. The second image is of a rendering of what an open-space floor plan could look like; it is not a rendering of Markit’s space, which has not yet been designed.