The Appeal of Premium Urban Offices for Companies

Best-in-class Buildings Attracting Employees Back to City Centers

Premium urban office spaces in major cities, exemplified by iconic buildings like One Vanderbilt, 425 Park, and 50 Hudson Yards in New York City, are experiencing high demand as companies upgrade their offices to entice employees away from remote work arrangements.

These top-priced buildings in central locations, such as Midtown Manhattan, have become coveted by tenants, with rents reaching up to $261 per square foot, rivaling Hong Kong's main business district. Despite the pandemic, premium office spaces in urban cores worldwide have demonstrated resilience, maintaining strong tenant demand compared to less central or suburban areas.

While technology enables remote work, the pandemic has highlighted the importance of the office environment in fostering collaboration and connection among colleagues. Companies are willing to pay a premium for office space that energizes employees and facilitates teamwork, leading to increased productivity and innovation.

New York City, renowned as a global gateway city, is expected to continue experiencing robust demand due to factors such as the war for talent, a focus on quality spaces, and anticipated infrastructure improvements around Penn Station and airports. Although some employees desire flexibility in their work locations, the city's appeal remains strong.

The resurgence in urban core areas extends beyond office spaces, as apartment leasing in New York City has also witnessed a significant increase. The amenity-rich lifestyle, combined with excellent public transportation, cultural amenities, and nightlife, attracts younger workers and contributes to the vibrancy of urban cores.

Gateway cities like New York have a unique advantage in attracting talent, boasting a broad pool of skilled professionals in finance, technology, and creative industries. The availability of a diverse talent pool contributes to the appeal of these cities compared to fast-growing submarkets in sunbelt regions.

According to Jeremy Kelly, lead director of JLL's Global Cities Research, central business districts (CBDs) globally are experiencing renewed vitality and purpose. Contrary to expectations, the pandemic has not resulted in a mass exodus from urban areas. Premium office spaces in accessible locations with exceptional amenities are expected to outperform other market segments in the future.