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Developers Struggle to Fill Manhattan Office Space

TERRY PRISTIN The New York Times
Macklowe Properties arranged for turnkey office space at 510 Madison Avenue, left; 11 Times Square, right, which is nearing completion, lacks tenants.

Macklowe Properties arranged for turnkey office space at 510 Madison Avenue, left; 11 Times Square, right, which is nearing completion, lacks tenants.


A striking 40-story tower under construction on Eighth Avenue between 41st and 42nd Streets in Midtown Manhattan has a number of things going for it, including floor-to-ceiling windows, still relatively rare for an office building; six terraces; a thick concrete core that reduces the need for view-obstructing columns; and many of the latest advances in energy-efficient technology.



But less than one year before it is due to be completed, there is one major thing that the 1.1-million-square-foot tower, known as 11 Times Square, is lacking: tenants.

In the 1980s, 53 million square feet of newly built office space flooded the market and led to a collapse of real estate values. For many years afterward, lenders would not finance speculative projects, so only those with commitments from anchor tenants were built. In the current decade, developers have been relatively restrained, adding only 20 million square feet, according to the brokerage firm CB Richard Ellis.

As real estate values and rents escalated in middecade, however, a few developers were able to secure hundreds of millions of dollars in financing for ground-up construction or extensive rehabilitation of existing buildings — all without any advance lease commitments but with heady expectations of high rents.

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