Sandy forces tenants into space race
On Tuesday night, New York City was in the midst of one of the worst natural disasters in recorded history. Transportation had stopped, residents were fleeing their homes throughout the metropolitan area, and most of Downtown was under water and in the dark.
At 8:30 that evening, Laura Kozelouzek, chief executive for Quest Workspaces, received a text message from Jones Lang Lesalle’s Sean Black.
Quest was scheduled to open its first shared office facility in New York City two days later, on Nov. 1, and Black was looking for somewhere for the employees at Foursquare, an online social networking site, to work.
The next day, Foursquare took 50 of the 55 desks at Quest’s 16,000 s/f space in the Time Life Building.
“We opened with a so-called bang, I guess you could say,” Kozelouzek said.
While the lights are back on in much of Manhattan, flood damage to downtown office buildings has left companies looking for temporary space where their employees can get back to work warm and dry – and fast.
“The driving factor with any of these situations is communications,” Michael Burgio, Cushman and Wakefied vice chairman, told Real Estate Weekly. “When you’ve got 40 or 50 people it’s hard to get everyone in the room,” forcing displaced tenants to look for internet and telephone-enabled workspaces for employees as close to each other as possible. “For most companies that’s enough, if they have a desk … furniture is not a big deal.”
Burgio has at least a dozen downtown clients who are looking for temporary space for the next 15 days or more, he said. Because of the extent of the damage downtown, shared workspaces in Midtown with good transportation – such as Kozelouzek’s Quest – are the most likely options.
Foursquare moved out of Quest’s space on Saturday, but the desks they vacated were quickly filled in by other companies, Kozelouzek said. And the requests keep coming in – as many as a dozen a day, from companies looking for anywhere from 30 to 100 desks.
“It doesn’t seem to be trickling off,” she said.
Month-to-month sublets are unusual, but Kozelouzek hopes help meet the emergency demand by persuading other tenants in the Time Life Building to sublease their unused office space, with Quest providing the crucial telecommunications infrastructure.
“You need to stay focused and help as many people as you can,” she said. “Decisions need to be made very quickly.”
But not everyone is moving out of downtown.
For the Financial District’s retailers and restaurants, ties to the neighborhood and a tight vacancy rate can make relocation impractical, according to Winick Realty’s Darrell Rubens.
“We really don’t have the available spaces down there,” he said. The neighborhood’s ground-floor retail spaces often have one or two basements, Rubens said, meaning many businesses in neighborhoods where the water rose 6 feet or more above ground are faced with multiple floors of destruction.
Rather than waiting for insurance companies, most downtown businesses set to work trying to get their spaces back online over the weekend, Rubens said.
“I’ve never see so many de-watering machines, so many generators,” he said.
In spite of the extent of the damage to inventories and infrastructure, Rubens is optimistic about how long it will take businesses to bounce back.
“I wouldn’t even be surprised if I went down there next weekend and it looked like nothing had happened,” he said.
That would be a welcome sight for those office tenants who are also making the decision to stay downtown.
Burgio has been in touch with one downtown client whose Broadway building is fully functional – except for the heat, which is provided by ConEd’s still-offline steam system.
In spite of the discomfort, Burgio said, the tenants are happy to have the services they do, and are staying put. “I told them to go over to Century 21 and get some thermals,” he said.