High-quality office real estate in New York continued to attract investor interest throughout the pandemic, and the office market overall is “certainly improving,” according to Nadir Settles, head of New York office investment at Nuveen Real Estate.
Speaking on the REIT Report, Settles noted that while there hasn’t been a lot of price discovery during the past year, the few transactions that did occur, notably for high-quality assets, did well. “Investors showed that they are willing to come to New York for the right product, even if it was office,” he said.
Settles said the New York office market has seen about a 10% drop in rents, “which is not bad for where we thought we were going.” Tenant improvements have increased substantially, while concessions have been made to attract tenants, he noted. Tenants are ready to commit quicker on turnkey space, he said, but they also want flexibility on how the deal is structured.
Settles also commented on the opportunities presented by the emergence of new property types in New York, specifically life science real estate. Compared to Boston, a mature life science market of about 20 million square feet, New York has only 2.5 million square feet.
“Some of the largest pharma companies are located within minutes of Manhattan, but don’t have the space to conduct research. It’s about finding the right buildings that you can convert,” Settles said. “When you look around New York, a market that is ripe for this sector, the stock is not there in droves.”