Tech Firms Land Leases at Garment District Energy Star

As the Midtown South submarket’s appeal – and asking rent – increases, technology industry tenants are finding more affordable opportunities just to the north in the diversifying Garment District.

Two technology companies have signed long-term leases at 1412 Broadway, the 25-story, Energy Star-labeled office tower designed originally by George and Edward Blum. The first, for 14,500 square feet, is on the 415,000-square-foot tower’s 22nd floor with Grind, a members-only collaborative workplace. It’s the company’s second location in Gotham – the first is in the Flatiron; it has another outpost in Chicago. The other lease was signed by Quartet Financial Services for 5500 square feet on the 23rd floor. The company – which has offices in London, Paris, Singapore, and Jersey City and Hawthorne, New Jersey – develops software for the financial industry.

Harbor Group International acquired 1412 Broadway in 2010 and put it through a significant capital improvement program, investing nearly $10 million to upgrade its electrical capacity and modernize its telecommunications and other infrastructure. Last year, it also invested nearly $1 million to renovate the tower’s lobby, entry area, interior corridors, and restrooms.  The upgrades helped HGI earn a 2011 Energy Star award for 1412 Broadway, which scored an impressive 85.

1412 Broadway is now 95 percent leased. These deals – and the improvements, both aesthetic and capital – are helping the tower diversify its tenant roster away from its Garment District roots. “Many of the newer tenants coming to the building are technology-focused,” Jordan Slone, the CEO of Harbor Group told REW. “The upgrades we have made to the infrastructure, along with the completion of a sleek and sophisticated lobby renovation, have succeeded in diversifying the tenant base.”

We’re increasingly seeing office towers couple capital improvements with aesthetic enhancements – lobby and elevator cab renovations, for example – in order to attract tenants from younger and more diverse industries. As more technology industry firms are getting priced out of the Midtown South and Flatiron/Silicon Alley submarkets, expect the repositioning of other similarly situated office towers in the neighborhood to accelerate.

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