By Orlando Lee Rodriguez
New York’s commercial and residential real estate landscape is being driven by the battle between retiring Baby Boomers and Generation X and Y as they clash over the direction of the workspace, and issues ranging from what a desirable neighborhood is and how often one physically comes into the office.
Speaking at the CoreNet Global NYC “New Trends in Real Estate Development” event in Midtown last week, a panel of experts weighed in from different vantage points on how the retirement of Baby Boomers makes this changing workforce spectrum, and how it effects the real estate market much differently than in years past.
“I’ve never seen such an internal struggle about the demographics of a workforce,” said Mitch Rudin, president and CEO of Brookfield Properties.
“20 years ago you lived on the Upper East Side, but not now. The Upper East Side has become the lower priced alternative for those who can’t afford other areas. Today the high powered CEO is not looking to live on Central Park, he’s looking at Tribeca.”
This trend is extending beyond corporate decision makers to the specialized portion of the workforce, with the majority of younger, formally educated employees tending to live below 34th Street, in Brooklyn and to a lesser extent Long Island City.
This, said panelists, is having a direct impact on where companies are choosing to sign long term leases. “If you are talking tech tenants, they are very culture minded and very much driven on where they are commuting from,” Ron T. Lo Russo, president of the New York Tri-State Region for Cushman and Wakefield. “Most of our engineers and our talent come from Brooklyn, or just outside the boroughs in more of the younger neighborhoods. That’s where their talent is. They’re recruiting from NYU, Cooper Union and places down there. It’s a recruiting-retention driven culture and collaboration that is driving our decisions.”
“The competition for talent continues to grow,” said Craig Walton, Global Real Estate Strategist at SAP. “You have to get talent to the building, so location access, commuter tax, all play into a decision of where we go.”
SAP has signed on to the first tower built at what will eventually become Hudson Yards. The location at the northern end of the High Line places them a single subway ride away from Long Island City and within walking distance of a Chelsea based workforce. Residential development along the High Line has exploded, with Michael Shvo re-appearing after being off the scene for years to announce collaborative project with Victor Homes six blocks away from SAP’s offices.
With Chelsea and Meatpacking district, once only the domain of rowdy nightclubs and prostitution, now destinations of decision makers and the West Village, SoHo and Tribeca reserved for the uber-rich, Brooklyn has become what each of these neighborhoods once were during their transformations over the last 15 odd years, magnets of artists, musicians, recent graduates and entrepreneurs.
“Brooklyn used to be an economic decision,” said Lauren Cahill of Avalon Bay. “Now it’s Brooklyn by choice. There really isn’t much difference between Brooklyn and Manhattan.”