If New York-based real estate advisers are to be believed, Manhattan is the ‘new Greenwich’.
Reuters reports that one consequence of growing hedge fund activity this year has been spiralling rental rates in Manhattan, which several brokers describe as “breathtaking”.
Greenwich, Connecticut is still regarded as a hedge fund haven, but many firms, such as the Tudor Group, have offices in both locations.
“They are the drivers of where market rents are going,” Alex Chudnoff, executive director of real estate advisers Cushman & Wakefield, told Reuters, adding: “Greenwich will never top New York City unless the principal lives there”.
There are about 1,250 hedge funds in Manhattan, according to estimates by industry research firm HedgeFund.net. And what they lack in terms of collective physical size, they make up for in buying power.
Even though many are not really able to pay top dollar for their offices, they need to do so to impress and retain both clients and staff, adds Reuters.
“They’ve brought everything up because they’ve raised the top level, and now the B space is priced as A space, and the C space is now priced at B space,” Ben Friedland, CB Richard Ellis Group senior vice president said.
In the first quarter of 2007, the average asking rent for top quality Midtown office space rose 27 percent to $62.89 per square foot from a year earlier. Rents surpassing $100 per square foot – shocking just a year ago – were too numerous to count, according to the report.
Now, as hedge fund numbers increase in Manhattan, some are going to areas previously unheard of: Third Avenue, lower Madison Avenue, Park Avenue South, the Financial District and Avenue of the Americas, where asking rents for 1 Bryant Park reach $185 per square foot.