Chelsea vs Penn Plaza: Office Space Compared

The four dollars, and what it buys

Chelsea's median ask is $56 per square foot per year and Penn Plaza's is $52: a $4 gap, about 8%. On a 6,100 square foot floor that is $24,400 a year, roughly $122,000 across a five year term before escalations. Both sit under the $75 citywide median across our book, Chelsea by about 25%, Penn Plaza by about 31%.

What matters more is the spread inside each market. Chelsea's nine floors ask $44 to $64, a range five times that $4 gap, while Penn Plaza's three ask $50 and $52 from one building and $135 at 2 Penn Plaza. Our two cheapest Chelsea floors price below the first two and a third asks exactly $50. The medians diverge at the top of Chelsea's range, the full 24th at 275 Seventh Avenue at $63 and the partial 10th at 151 West 26th Street at $64.

Depth decides how much of the ask you recover. In Chelsea several landlords know they are competing for you; in Penn Plaza one owner does not.

What we hold in each, and who fits

Nine Chelsea floors across seven buildings, 2,937 to 18,668 square feet, roughly 17 to 107 desks at the 175 square feet per person we plan to. Three Penn Plaza floors, two at 213 West 35th Street and one at 2 Penn Plaza, 5,070 to 6,100 square feet, 29 to 35 desks. That asymmetry ends most of these comparisons before rent is discussed.

• 17 to 28 people: Chelsea only, which holds two floors under 3,000 square feet and a third at 3,500.
• 29 to 35: the one band where both markets want the same tenant.
• 36 to 107: Chelsea, at 7,047, 7,158, 9,000, 9,500, 17,610 and 18,668 square feet.
• Beyond that: neither, and the search widens.

Two of our three Penn Plaza floors are the 10th and 11th of one building, so a team near 65 can ask about both, roughly 11,350 square feet, subject to the owner's appetite. A market this thin is fragile: if one leases, your choice narrows sharply.

Getting there, and getting people to agree to it

The service in Chelsea is A/C/E, 1, F/M at 14th and 23rd. Penn Plaza's is 1/2/3, A/C/E, LIRR, NJ Transit. The A/C/E reaches both, so a subway rider already in the five boroughs will find the two addresses close to interchangeable.

Regional rail is the whole of the difference. LIRR and NJ Transit at the door turn a two-leg commute into one leg, and the second leg is what people quit over: the transfer, the platform wait, the ten minutes that becomes twenty-five when a train goes wrong. Ask for four days a week and ten extra minutes each way is eighty minutes a week out of someone's life.

Read your roster before you read the rent. If a real share of the people you employ or hope to hire boards a train outside the city, Penn Plaza earns its keep daily; if they all ride the subway, you are buying an amenity nobody uses.

Our recommendation, by tenant type

Under 30 people, take Chelsea, and it is not close. Penn Plaza's smallest floor is 5,070 square feet, so a team of twenty buys half again the space it needs: our 2,978 square foot Chelsea floor at $44 runs about $131,000 a year against $262,500 for the cheapest Penn Plaza floor anywhere near that size, the 5,250 foot 10th at $50. The cheaper submarket costs that tenant twice as much.

Between 30 and 35 with a workforce arriving by rail, take Penn Plaza and stop deliberating: the sizes fit, the rent is lower, and the commute pays out daily for the length of the lease.

For a city team of the same size, one you are recruiting against other technology and media companies, pay for Chelsea. The premium on the 7,047 square feet at 104 West 27th Street is about $28,000 a year at the two medians, the line founders talk themselves out of and regret a year later. Candidates compare the office with offices in Flatiron and Soho, and a bad hiring year costs far more.

Above 35, Chelsea by default: Penn Plaza has nothing that size today.

How to settle this in one afternoon

Both submarkets sit within ten blocks of each other, and we hold floors in each. Penn Plaza is a single stop, two of its floors at one address and the third a block away, and Chelsea's are a short walk south.

Bring your real headcount and ask for a test fit before anyone trades rent numbers: a plan that seats 34 people comfortably and one that seats 34 on paper are different products at the same price. Then compare deals rather than asks, on the loss factor behind the rentable footage, electric submetered or included, cleaning, escalation, the letter of credit, a good guy guarantee, improvement allowance and free rent.

Floors quoted $4 apart routinely finish within a dollar once all of that is priced. If you are building out, leave room for design, DOB filing, permitting and construction before you commit to a move-in date. We represent tenants only, and can put the tour together this week.