Midtown vs Union Square: Office Space Compared

The thirty-seven dollar gap and what drives it

Across the 4 floors we hold in Midtown, asking rents run $79 to $130 per square foot per year with a median of $125; the 3 in Union Square run $60 to $115 with a median of $88. That is nine dollars a foot, roughly 10%, running in the direction most tenants do not expect. Against the $75 citywide median across our book, Midtown sits about 5% above and Union Square about 17%.

Thin books drive the gap more than building quality does. Midtown's median is a floor you can stand in, the entire 26th at 1700 Broadway, 13,266 square feet at $79. Union Square's is not: only two of its three floors publish an ask, at $60 and $115, so $88 is their midpoint.

The cheapest square foot in the comparison sits in Union Square, at 29 West 17th Street, nineteen dollars under Midtown's $79 floor. Nine dollars a foot is $119,394 a year on 13,266 square feet, though free rent and improvement dollars can move effective cost by more.

What we hold in each, and who each can house

Availability decides more of these searches than price does, and the two books barely overlap.

• Midtown: 4 floors, 7,092 to 19,097 square feet, roughly 41 to 109 desks at the 175 square feet per person we plan against, asking $79 to $130.
• Union Square: 3 floors, 2,500 to 13,754 square feet, roughly 14 to 79 desks, asking $60 to $115.

The only band where both can house the same company runs 7,092 to 13,754 square feet, and Midtown puts three floors in it against one, the entire 2nd floor at 836 Broadway, priced on request. Below 41 desks Union Square is the only answer; above 79 desks only 277 Park Avenue clears it, 19,097 square feet at $130.

At the top of that band sits the nearest like for like. 1700 Broadway at 13,266 square feet and $79 is $1,048,014 a year, while 836 Broadway is 13,754, within 500 of the same footprint; at the Union Square median it would read $1,210,352. Three of the four Midtown spaces are entire floors against one of three in Union Square.

Getting there, and getting your people there

Midtown reaches nearly every line, with Grand Central and Penn within reach. Union Square is served by the 4/5/6, N/Q/R/W and L, all at 14th Street. They solve different commutes.

Midtown answers the regional commute, since people traveling in from outside the city arrive at Grand Central or Penn and finish on foot. Union Square answers by concentration, three trunk lines at one station putting Brooklyn's engineering talent a stop away and most of the city inside a forty minute door to door.

Which matters more depends on who you have not hired yet. Senior candidates commuting in are lost at the second transfer; engineers in Brooklyn and Queens are won at 14th Street. Midtown neighbors Bryant Park, Grand Central and Penn Plaza; Union Square neighbors Flatiron, NoMad and Greenwich Village, where a team stays after six.

Our recommendation, by tenant type

Under about 40 desks, take Union Square, and treat that as arithmetic rather than taste, because the smallest floor we hold in Midtown is 7,092 square feet. The partial seventh at 29 West 17th Street asks $60 and runs $12,500 a month.

Above about 80 desks the logic reverses onto 277 Park Avenue, the only floor on either list that seats a company that size. In the contested band between, roughly 41 to 79 desks, Midtown gives you three floors to choose from against one, but it asks thirty-seven dollars a foot more at the median, so take a Midtown floor only when the building itself earns the difference.

One kind of company should take Union Square regardless of how thin the choice is there. If engineering hiring is the binding constraint on the business, the 14th Street interchange is a recruiting instrument and Midtown is not. Thirty-seven dollars a foot under Midtown's median on 8,000 square feet is $296,000 a year saved, more than one senior engineer fully loaded.

The tenant we argue with is the forty person company reaching for the partial 21st floor at 520 Madison Avenue at $125 because the address photographs well. That floor is $886,500 a year, and the same rent at $75 buys 11,820 square feet. Buy the address when clients come to you; otherwise buy the floor.

How to settle this in one afternoon

These submarkets sit minutes apart and we hold floors in both, so settle it on foot. The tour we would build runs 29 West 17th Street against 1700 Broadway, 2,500 square feet at $60 and 13,266 at $79, more than five times the floor for nineteen dollars more.

Bring the headcount you expect in twenty-four months rather than today's, since it decides which submarket is even eligible, and have us pull usable square footage beside the rentable figure, because loss factor is set building by building.

Settle term, free rent, improvement allowance and escalations before anyone falls for a floor, and count the buildout into the calendar, since a test fit, pricing and a DOB filing add months. We represent tenants only.