Midtown houses blocks of old office buildings. These buildings are too old to attract new tenants, but not old enough to be demolished or used for another purpose.
If you look at Third Avenue between 42nd to 59th Street, we see this problem in plain sight: the older properties along this stretch have 29% vacancy, which is double the amount from 4 years ago. Their vacancy rate is 10% points higher than the city’s average of 19%, according to data from brokerage firm Savilis.
These buildings were built from the 1950s to the 1980s, and many of them have had few upgrades. Even those that were renovated still struggle to compete with buildings with more modern upgrades.
New York’s zoning and architectural restrictions make conversions of these properties into residential space difficult.
The Durst Organization has invested $150 million dollars into renovating 825 Third Avenue, a 40-story building with 530,000 square feet. Durst contemplated a residential conversion initially but decided on a commercial upgrade instead.
This property will open in October and will be a test for the demand of upgraded Third Avenue space. The renovations include new glass exterior, heating and cooling systems, an updated lobby and outdoor terrace. So far Durst has signed three leases in this building for a total of 45,000 square feet.