Office Space over $100 per Sq Ft in Penn Plaza

What over $100 a foot buys in Penn Plaza right now

Three floors sit on our Penn Plaza book and exactly one clears $100. This band is the ceiling of the submarket rather than a range inside it.

• 2 Penn Plaza, partial 17th floor: 5,070 square feet at $135 per square foot per year, $684,450 annually, about $57,038 a month, roughly 29 desks at the 175 square feet per person we plan against.
• Described to us as a brand new high end prebuilt that can take a team of 20 or more, built with one executive office, three further offices, a phone room, a conference room, open seating for 21 workstations, and a reception and lounge area. We hold a floor plan for it.

Work from that built plan rather than our 29. Twenty-one workstations and four offices is 25 seats already standing, so a team of 25 moves in and works, and reaching 29 is a furniture question rather than a construction one. Benched more densely the plate takes about 36; more private offices bring it nearer 20.

The monthly number, and how to run it on any floor

New York quotes rent annually per rentable square foot, so the figure a finance team needs is one multiplication and one division: annual rent per square foot times square footage, divided by twelve. Here, 5,070 times $135 is $684,450, and $684,450 divided by twelve is $57,038.

One dollar of asking rent is worth $5,070 a year here, so five dollars off the ask saves $25,350 a year and $126,750 across a five-year term. Per seat, $57,038 across 29 desks is about $1,967 a month, and across the 25 seats actually built it is $2,282, the figure that maps onto a headcount plan.

The 5,070 is rentable rather than usable, since loss factor pushes corridor, lobby and restroom area back onto the tenants paying for it. At the 15% to 25% ordinary in Manhattan, usable area here lands near 4,310 to 3,803 square feet. Ask for a measured plan and compare cost per usable seat, the comparison that survives a move.

What the $135 does not include

Five costs sit outside the $135, and budgets in this band break underneath the headline rather than at it.

• Electric rarely sits inside base rent, arriving as a submeter with an administration factor or as a fixed $2 to $4 per square foot per year, $10,140 to $20,280 annually on 5,070 feet.
• Cleaning gets read line by line, since pantry cleanup, interior glass and debris removal are commonly carved out of nightly service.
• Tax escalations run from a base year fixed in the lease, and the base year matters more than the percentage: one struck before a full assessment bites hardest by year three.
• Operating expense escalations arrive over a base year or on a porter's wage formula, on top of the annual step in base rent, commonly 2.5% to 3%. A 3% step adds about $20,534 in year two and carries year five to roughly $770,400, about $64,200 a month.
• Buildout above any allowance is the largest of the five on most floors, though less so here. A prebuilt is delivered finished, so occupancy runs to a few weeks rather than the ten to sixteen a custom fit-out needs once DOB filing sits on the critical path.

What moves at the top of a submarket, and where we push

Face rent moves least at the top, because whatever gets signed on the only floor above $100 sets the quote on the next one. The gap between asking and taking rent gets built out of five other items.

• Free rent goes first, since it costs a landlord a stretch of income rather than a mark on the rent roll. A month here is $57,038, and three months across a sixty-month term brings the effective rent to about $128 a foot.
• The improvement allowance is the weakest lever on a prebuilt, because the landlord has already spent it. Push instead on what the delivered condition includes, on getting the inventory in writing, and on funding whatever your own layout needs on top.
• Security locks up real cash: six months against a $57,038 obligation is $342,225 in a letter of credit. We argue the amount down and the burn-down in, and we argue the signer and duration of the good guy guarantee rather than accepting the form.
• Term buys the rest, so a company likely to want more room in the building should trade years now for a right of first offer.
• Caps decide the back half: a stated percentage rather than an index, a capped pass-through, a fully assessed tax base year, and a restoration clause settled at signature rather than discovered in year five.

How $135 sits against the market, and who the band suits

Our New York book runs to a $75 median asking rent across 49 floors in a range of $43 to $200, so this floor does not sit above the market. It is the top of it. Penn Plaza's own median is $52 across the three floors we carry, a submarket about 31% below the city, which puts $135 roughly 160% above its own neighborhood and 80% above the citywide number.

The monthly check says it more plainly. At $57,038 a month this is the largest obligation in our Penn Plaza book by a distance: 213 West 35th Street's 11th floor runs about $26,433 for 6,100 square feet at $52, furnished with a conference room and a terrace, and its 10th floor about $21,875 for 5,250 at $50. The 11th floor is 1,030 square feet larger than the 2 Penn Plaza suite and $30,605 a month cheaper, $367,260 a year. None of that gap is a size gap.

What the premium buys is the building and a finished floor, and only a tour prices that honestly. The district trades on access, with the 1/2/3, the A/C/E, the LIRR and NJ Transit serving it, worth considerably more to a company with a commuting team than to one hiring locally. The band suits a business of about 25 that wants a new prebuilt it can occupy quickly and can carry electric, escalations and a reception area on top of $684,450 a year. Everything else here asks less than half as much per foot.