Cushman & Wakefield analysis: Typical Manhattan "spec" skyscraper is 38.6% occupied upon opening

A Cushman & Wakefield analysis of major speculative office buildings in Manhattan shows that average occupancy rates stood at 36.8% on the day the buildings opened. The research examined the seven largest speculative office buildings to open in Manhattan's Downtown and Midtown districts since 2006. The 3 million s/f One World Trade Center, poised to open this fall, ranked highest by far in terms of sheer volume of opening-day occupancy among buildings in the analysis. Scheduled to open later this year, One World Trade Center to date has recorded 1.757 million s/f in total leasing, or 57.8% of the building's rentable office space. This square footage represents 180% more occupied space than that pre-leased upon the opening of the second-fullest property analyzed, 4 World Trade Center. Overall occupancy levels ranged from 0.6% to 65.7% across the seven buildings when their doors opened. The buildings themselves ranged from as large as 3 million s/f to as small as 295,824 s/f. In a finding that may surprise many, three "spec" office properties opened with occupancy levels at 3.5% or lower. The office tower at 505 Fifth Ave. ranked first in occupancy percentage, at 65.7%, when it opened in 2006. However, with only 295,824 s/f of total rentable space, 505 Fifth Ave. is the smallest property surveyed. A total of 194,257 s/f had been pre-leased at the time of the opening. The property is now fully occupied. "The data show that developers who undertake speculative Manhattan office towers over build-to-suit projects, have a natural expectation that a significant percentage of leasing may occur after the building opens," said Tara Stacom, executive vice chairman of Cushman & Wakefield. "One World Trade Center is one of the few modern Manhattan spec buildings to have approached 60% leasing prior to opening, a testament to the power of its design, construction, and globally recognized address. While we see that industry-leading developers often take a strategic and long-term approach when it comes to lease-up timetables for spec office towers, One World Trade Center has exceeded the norm." The 2 million s/f 4 World Trade Center ranked third in occupancy level when it opened for business last year, with 48.8%of its space leased, equaling 975,828 s/f. The property is presently 54.6% occupied. Coming in fourth on a percentage basis, 250 West 55th St. — a 896,000 s/f property — opened at 47-percent occupancy in 2013 with 420,731 s/f in pre-leased space. Present occupancy is 74.6%. Opening day lease-up percentages then take a major drop for the last three properties. Ranking fifth — at 3.5% occupancy upon opening — is 7 World Trade Center. The 1.7-million s/f tower — now 100% occupied — had signed only 59,275 s/f in leases when it opened in 2006. The sixth-emptiest "spec" building is 510 Madison Ave., which opened in 2009 at just 3.3% occupancy. The 350,000 s/f office building, with only 11,500 s/f pre-leased upon opening, is now 95.2-occupied. Ranking last in opening-day, lease-up ratio — at 0.6%— is the 1.057 s/f 11 Times Square. When the tower began operations in 2010, it was virtually empty with pre-leasing totaling only 6,600 s/f. The property is now 79.4% occupied.