{"id":341569,"date":"2026-09-09T08:01:42","date_gmt":"2026-09-09T08:01:42","guid":{"rendered":"https:\/\/www.newsbeep.com\/us-ny\/341569\/"},"modified":"2026-09-09T08:01:42","modified_gmt":"2026-09-09T08:01:42","slug":"for-manhattan-class-b-office-the-days-of-optional-amenities-are-past-commercial-observer","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/us-ny\/341569\/","title":{"rendered":"For Manhattan Class B Office, the Days of Optional Amenities Are Past \u2013 Commercial Observer"},"content":{"rendered":"

After several years of Class A Manhattan office product benefiting from ever-increasing levels of demand<\/a>, the heat in the sector is beginning to shift downward.<\/p>\n

Companies in search of well-kept space at less-than-trophy rents are seeking more Class B office space than before while Class A is experiencing a slight downshift in desirability \u2014 and a new class of amenities might be making the difference.\u00a0<\/p>\n

SEE ALSO: Women\u2019s Clothing Store Esti\u2019s Takes 8K SF at 2263 Nostrand Avenue in Midwood<\/a><\/p>\n

According to CoStar<\/a>, while office demand in New York is \u201cwhite hot\u201d overall, Class A demand, in the form of new leasing, was lower in the first half of 2026 than it had been during the same time last year \u2014 from 11.6 million in the first half of 2025 to 10.3 million square feet in 2026.<\/p>\n

Class B and C demand, on the other hand, is rising due to factors that include less Class A availability, rising Class A rents, and a competitive environment within Class B that has made amenities an increasingly common addition to previously unadorned spaces.<\/p>\n

New leasing for Class B and C office in the first half of this year reached around 7 million square feet. This not only eclipses activity in the B and C classes over the same period in each of the past three years, which ranged from 4.2 million to 5.2 million square feet, but has surpassed the pre-pandemic average from 2015 to 2019 of around 6.4 million.<\/p>\n

CoStar also noted that Class B and C product \u2014 classified as office buildings that merit one, two or three stars on a five-star scale \u2014 averaged around 39 percent of new leasing activity pre-pandemic, a number that dropped to just 31 percent by last year. For the first half of this year, that percentage had risen back up to roughly 40 percent.<\/p>\n

All of this leads the data company to conclude that \u201cthe city\u2019s office recovery is no longer limited to trophy or top-tier buildings, with more price-sensitive and mid-market demand returning.\u201d\u00a0<\/p>\n

But that rising demand comes with a caveat beyond the numbers: that Class B offices provide at least some of the types of amenities previously found mostly in Class A spaces.<\/p>\n

The current competitive environment, therefore, requires Class B office owners to think like Class A owners, albeit with less space and smaller budgets.\u00a0\u00a0<\/p>\n

When discussing the efforts of Class B owners to upgrade their buildings, it\u2019s worth reinforcing that the terms Class A and Class B (and Class C, for that matter) are sometimes loosely defined and always driven by marketing, and their definitions have shifted in recent years. Plus, owners and brokers refer to some buildings as B-plus or A-minus, and one company\u2019s Class A can be regarded elsewhere as A-minus.\u00a0\u00a0<\/p>\n

Given the rise of trophy properties, with amenities that could include top chef-branded eateries, high-end spas, concierge services and the equivalent of private clubs, it\u2019s fair to say that standards at the very top have risen substantially since the pandemic, pulling the definitions of other classes of buildings upward with them.\u00a0<\/p>\n

Today\u2019s Class B office space, then, might resemble what the lower end of Class A might have been just a decade ago.\u00a0<\/p>\n

Empire State Realty Trust<\/a> (ESRT) rejects the class designations, referring to some of its older but well-amenitized buildings as \u201cprewar trophies.\u201d<\/p>\n

Ryan Kass, executive vice president, co-head of real estate and chief revenue office at ESRT, noted that the change in approach to amenities accompanies a recent shift in the very significance of the office itself.<\/p>\n

\u201cWhat\u2019s changed in real estate is that office space is no longer just an expense on the balance sheet. Your office space, the location and the amenities you provide are all about employee recruitment and retention, and ultimately employee productivity,\u201d said Kass. \u201cSo our job is to partner with our tenants and help them get and retain top talent. That drives everything we do.\u201d<\/p>\n

With this in mind, Kass said that, since COVID, the Manhattan office market has evolved from being separated by basic class distinctions into a divide between haves and have-nots.<\/p>\n

\u201cTenants want modernized, amenitized, well-located buildings, and they want them with landlords that have the financial wherewithal and stability to deliver on their promises,\u201d said Kass. \u201cWe\u2019re able to attract tenants who are looking at steel and glass, but see the value proposition within our product. We\u2019ve done all the modernization. We have the infrastructure of new steel and glass \u2014 the indoor environmental air quality, the sustainability. We check all the boxes that brand-new construction checks.\u201d<\/p>\n

A second-quarter 2026 Manhattan report<\/a> by Cushman & Wakefield placed Class A asking rents in Midtown at $88.50 per square foot, while Midtown South asking rents for Class A office sat around $104.50.\u00a0\u00a0\u00a0\u00a0<\/p>\n

By comparison, several recent leases at ESRT buildings signed for asking rents in the low $60s per square foot. These include Jencap Group paying $61 per square foot<\/a> for 19,883 square feet at 1350 Broadway in October 2025, and Steve Madden signing for 60,000 square feet<\/a> at 501 Seventh Avenue in April 2026, also for an asking rent in the low $60s.<\/p>\n

But, if the rents place these buildings firmly in the Class B category, tenants are getting more for their money than the classification might have suggested not that long ago.<\/p>\n

That\u2019s because ESRT owns seven buildings within a narrow Midtown footprint, allowing them to host significant amenities in one that can be utilized by tenants in all.<\/p>\n

\u201cWe have 6 million square feet within a small radius,\u201d said Kass. \u201cThe owner of a 300,000-square-foot building probably can\u2019t make the economic case to put a 130-person
all-hands conference center in a building like we have at 1400 Broadway, or a 250-person rooftop at the top of 1333 Broadway<\/a> like we did.\u201d<\/p>\n

Terraces in, gyms out<\/p>\n

Conversations with Class B office owners and brokers indicate that outdoor space and \u201ctown hall\u201d-style meeting space are the amenities most in demand. Office fitness centers, while not being completely abandoned, seem to be less desired.<\/p>\n

Michael T. Cohen is a principal at Williams Equities<\/a>, which owns Class B office buildings mostly in Midtown South, Manhattan\u2019s traditional hub for Class B office properties.\u00a0<\/p>\n

Cohen said there has been a \u201csea change\u201d in the approach toward amenities in Class B office space over the past decade, driven at least in part by the question of how to help companies get employees back to the office after the work-from-home COVID years.\u00a0<\/p>\n

\u201cI sometimes laugh when I look at what was once considered a setback and a good place to put air-conditioning equipment. Today, that\u2019s a terrace,\u201d said Cohen, who also serves as New York tri-state president for Colliers and as chairman of the Flatiron NoMad Partnership.<\/p>\n

\u201cEverybody\u2019s been asking themselves which amenities are going to help bring people back into the office, and which amenities are going to help our occupants achieve greater efficiency and entice them into our buildings versus somebody else\u2019s,\u201d said Cohen.<\/p>\n

\u201cWe ask ourselves: Who is our target tenant and what amenities will matter most to them?\u201d said Cohen. \u201cSo for example, about fitness, our tenant is able to join any number of health clubs in the immediate area that will have better facilities than we could ever offer. So, is that amenity appealing to our target tenancy? The answer is no. But you can\u2019t outsource a bike room to the neighborhood Crunch. People want to be able to bike to work, particularly our target clientele. That matters.\u201d<\/p>\n

Andrew Wiener is head of commercial office leasing for the Feil Organization<\/a>, which owns and operates roughly 15 Class B office buildings in Midtown and Midtown South.\u00a0<\/p>\n

Feil is currently developing what Wiener refers to as the company\u2019s \u201cfirst large-scale amenity,\u201d a 14,000-square-foot roof deck that will be accessible to all tenants at the 357,000-square-foot, 18-story 7 Penn Plaza (aka 370 Seventh Avenue), which was built in 1921.<\/p>\n

Wiener noted that when considering which amenities to add, owners of Class B buildings have a very different calculus than the often-institutional owners of trophy office product.\u00a0\u00a0\u00a0<\/p>\n

\u201cFor institutional capital, [that cost is] on your balance sheet \u2014 spend the money, increase the building\u2019s value, and you\u2019ll deal with it later because it\u2019s within a consortium of buildings,\u201d said Wiener. \u201cWith individual owners, which you\u2019re getting with Class B buildings, you\u2019re hard pressed to spend a ton of capital if you\u2019re not able to vastly increase the rent.\u201d<\/p>\n

Wiener also noted that a building\u2019s size is another factor in determining which amenities can be developed.<\/p>\n

\u201cIn buildings that are 500,000 to a million square feet or greater, it\u2019s a lot easier to carve out 10,000 to 15,000 feet for an amenity space, take it out of the rent roll and spread [the cost] around,\u201d said Wiener.<\/p>\n

The hub-and-spoke approach\u00a0<\/p>\n

Some Class B owners add amenities in less-marketable spaces, or create building-wide amenities out of single-tenant amenities after regaining control of that space.\u00a0\u00a0<\/p>\n

At Feil\u2019s 841-853 Broadway, two technically separate but connected buildings, the company will be able to reclaim an outdoor terrace at 853 Broadway from an outgoing 10-year tenant 18 months from now. Feil plans to convert the terrace into a building-wide amenity.<\/p>\n

At the company\u2019s 261 Fifth Avenue, a tenant with exclusive rights to a roof deck in the building recently relocated to a larger space elsewhere in the company\u2019s portfolio. That roof deck will be available to all tenants moving forward.<\/p>\n

Wiener also said that Feil plans to install a conference center at its 488 Madison Avenue when it regains control of space on the second floor that is \u201cnot desirable space.\u201d<\/p>\n

\u201cWhen you talk to architects, tenants and their project managers, the location of the amenity really matters,\u201d said Wiener. \u201cSo we\u2019re going to take a space that\u2019s undervalued, underutilized and would otherwise get a low rent, and we\u2019re going to amenitize that with a great conference center which is connected to the lobby.\u201d<\/p>\n

Brian Soto, director of acquisitions and asset management at Time Equities<\/a>, said that the emergence of the luxury approach within the Class A and trophy office space has pressed Class B office owners in new ways.<\/p>\n

\u201cThe flight to quality has really squeezed the Class B market, and we don\u2019t only see that in New York City. We see that throughout our portfolio and throughout the country,\u201d said Soto, who mentioned that the addition of new amenities is sometimes based less on immediate tenant demand than simply the need for Class B owners to remain competitive.<\/p>\n

\u201cAmenities are a benefit, but I would not say they are the deciding factor for most companies,\u201d said Soto. \u201cWhen one building has amenities and another doesn\u2019t, that\u2019s going to bring [prospective tenants] to the first one even if there\u2019s a price differentiation. At our 55 Fifth Avenue, where we created a fitness center, a wellness room and a new rooftop deck, it helps, but I don\u2019t think it\u2019s the defining factor.\u201d<\/p>\n

The Kaufman Organization<\/a> owns and operates around 12 Class B office buildings in Midtown South ranging from about 60,000 to 250,000 square feet, said Grant Greenspan, a principal at the Kaufman Leasing Company.<\/p>\n

Greenspan, who refers to Midtown South as the central hub for \u201cboth the Class B building and the AI tenant\u201d and \u201cthe most robust market in the city right now,\u201d said Kaufman put one amenity center in the basement of its 875 Sixth Avenue, also known as One NoMad, at a cost of around $300 per square foot, and another on the 30th floor at 450 Seventh Avenue, where it also has a roof deck and a conference facility.<\/p>\n

\u201cWe don\u2019t call them \u2018basements\u2019 anymore. They\u2019re \u2018lower levels,\u2019 \u201d said Greenspan. \u201cThese amenity centers essentially consist of 5,000- to 10,000-square-foot spaces where a tenant can hold an event. They\u2019ll have things like a bar, a catering facility, a warming kitchen and TV sets, and we also have conference rooms that can be rented out with full audio and video capabilities as well as a screening room. It\u2019s all very conducive to on-site corporate events.\u201d<\/p>\n

With 450 Seventh Avenue on the corner of West 34th Street, the building\u2019s amenities provide an advantage in a competitive area.\u00a0<\/p>\n

\u201c450 Seventh Avenue competes with Penn buildings, which obviously have significantly larger amenity centers,\u201d Greenspan said, referring to Vornado Realty Trust\u2019s mixed-use towers. \u201cBut the idea is, if they\u2019re at $130 or $150 a square foot, we\u2019re $60 to $70 a square foot here. It makes sense for tenants that want that amenity but don\u2019t want to pay double-digit rents.\u201d<\/p>\n

Pariveda Solutions, a Dallas-based consulting company, moved its 27-person New York office to One NoMad from a smaller, amenity-free Midtown office in July after the expiration of a 10-year lease.<\/p>\n

Liv Steinfeld, employee experience specialist at Pariveda, made it clear that the company expected, and has received, a much-upgraded office experience in its new surroundings, clearly beyond what a Class B office would have offered in the past.<\/p>\n

\u201cWe really appreciated not only the amenity spaces, but the facilities provided in the building,\u201d said Steinfeld. \u201cWe were going from an experience where we had to provide all of our vendors for all of our needs, versus coming into this space where pretty much everything is taken care of for us.\u201d<\/p>\n

The amenities Greenspan spoke of, Steinfeld said, were a significant part of that.<\/p>\n

\u201cThe amenity spaces have been super helpful, and were a big attraction for us,\u201d said Steinfeld. \u201cWe hosted a big grand opening for our new space a couple of weeks ago, and we got to host it there. We had about 45 people attend. We were able to utilize this great speakeasy lounge area they have, and they also have a screening room where we were able to display demo content for our clients. We were not in a place to be able to do that in our old space.\u201d<\/p>\n

In addition to proving to be useful, Steinfeld said the amenity space has led to cost savings.<\/p>\n

\u201cHosting and doing events outside the space is costly. Having a new office space that allows us to host internally lets us save costs, creating a better ROI,\u201d said Steinfeld. The company\u2019s employees have reacted very positively to the space, she said.<\/p>\n

\u201cOur New York employees really value the time they can be in person together,\u201d said Steinfeld. \u201cThey operate best when they\u2019re able to have that sense of community. So they\u2019ve been ecstatic. Creating different areas where they can spend time together and connect makes them that much more excited to be there.\u201d<\/p>\n

David Falk, president of the New York tri-state region at Newmark, believes new amenities can be essential when it comes to leasing space at older buildings.\u00a0<\/p>\n

\u201cWe have found outdoor space and roof decks to be game-changers, [particularly] communal roof decks where people could host a cocktail party, go for lunch, or do their work with a laptop,\u201d said Falk. \u201c437 Madison, which is probably an A-minus, built an amazing amenity space that\u2019s professionally run, and they run events and have outdoor space. We represented a company that moved there from a building that didn\u2019t have that experience. They leased three floors in the building, and they went there because the whole experience was very inviting.\u201d<\/p>\n

Amenities without the space\u00a0<\/p>\n

Given the space restrictions at many Class B buildings, some owners of smaller buildings find the need to take more creative approaches.<\/p>\n

Jeff Gural, chairman and principal of GFP Real Estate<\/a>, noted that many of his Manhattan office buildings are under 200,000 square feet, leaving the company with limited options to add amenities.<\/p>\n

\u201cIt\u2019s hard to dedicate 10,000 or 15,000 feet of a 150,000-foot building to amenities,\u201d said Gural. \u201cSo we do something a little different.\u201d<\/p>\n

At 520 Eighth Avenue, which was built in 1926 and is one of GFP\u2019s larger properties at 860,000 square feet, the company is creating an amenity space that will include several conference rooms, a golf simulator and a gym with locker facilities.<\/p>\n

Beyond that, GFP enhances the tenant experience with some unconventional extras.<\/p>\n

The company made a deal with a GFP tenant called Buckle My Shoe Preschool. Any GFP tenant can enroll a child in the school at half the price of its normal tuition, a valuable commodity in New York City.\u00a0\u00a0<\/p>\n

The company also offers some unusual potential perks for tenants willing to try their luck.<\/p>\n

\u201cWe bought a suite in MetLife Stadium that holds 24 people, and we run a contest during football season,\u201d said Gural. \u201c[Any GFP tenant] can enter a contest to win two tickets to a Jets or Giants game in the luxury suite, with food and all the amenities.\u201d\u00a0<\/p>\n

This amenity became even more valuable in 2023, when pop superstar Taylor Swift played three nights at the stadium during her Eras Tour.<\/p>\n

\u201cWe had 120 tickets that we gave away to tenants in our buildings,\u201d said Gural, who noted that the company also gives away tickets to Broadway shows and other events.<\/p>\n

This all said, some Class B buildings have seen less of a difference between operations pre- and post-COVID.<\/p>\n

Jeff Buslik is executive managing director at Adams & Company, which owns 21 properties in Manhattan and handles leasing and property management for 18 others. Buslik said little has changed in how Adams & Company manages its New York office buildings over the past decade.<\/p>\n

\u201cWe\u2019ve had a conference center available for our tenants since pre-COVID. We\u2019ve expanded those offerings, but it\u2019s not new for us,\u201d said Buslik. \u201cWe have found that our tenants aren\u2019t renting because of the amenities. They\u2019re renting because of the buildings themselves, which are almost like amenities because they\u2019re so well cared for.\u201d<\/p>\n

Buslik, who said that Adams & Company has around a 2 percent vacancy rate across its approximately 7.5 million square feet of Manhattan office space, said he believes that while owners struggling to rent space will be incentivized to add extras, most tenants of Class B space seek well-functioning buildings before caring about the bells-and-whistles extras.<\/p>\n

\u201cThe differentiator is not the amenity. It\u2019s the service and value they\u2019re getting out of that property,\u201d said Buslik. \u201cThe companies installing amenities you would typically see in a Class A building are the ones that have no choice. They\u2019re trying to make their building better because they\u2019re lacking in those other departments, and this is what they think will get them over the hump.\u201d<\/p>\n

And Time Equities\u2019 Soto believes that, for tenants prioritizing amenities, Class B additions simply can\u2019t compete with Class A buildings if the tenant is willing to pay for extravagance.<\/p>\n

\u201cWe have seen people look at one of our Class B properties and compare it with newer and highly amenitized Class A product,\u201d said Soto, \u201cand make the decision that they would rather pay a little more and give their staff more options than save a few bucks a year.\u201d<\/p>\n

Larry Getlen can be reached at lgetlen@commercialobserver.com<\/a>.\u00a0<\/p>\n","protected":false},"excerpt":{"rendered":"After several years of Class A Manhattan office product benefiting from ever-increasing levels of demand, the heat in…\n","protected":false},"author":2,"featured_media":341570,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[35],"tags":[128182,98787,128183,37990,113505,128184,128185,37991,128186,118236,128187,48371,128188,75,84,83,23596,9,24,63,15165],"class_list":["post-341569","post","type-post","status-publish","format-standard","has-post-thumbnail","category-manhattan","tag-1333-broadway","tag-1400-broadway","tag-450-seventh-avenue","tag-488-madison-avenue","tag-520-eighth-avenue","tag-55-fifth-avenue","tag-841-853-broadway","tag-andrew-wiener","tag-brian-soto","tag-grant-greenspan","tag-jeff-buslik","tag-jeff-gural","tag-liv-stienfeld","tag-manhattan","tag-manhattan-headlines","tag-manhattan-news","tag-michael-cohen","tag-new-york","tag-new-york-city","tag-nyc","tag-ryan-kass"],"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/341569","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/comments?post=341569"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/posts\/341569\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media\/341570"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/media?parent=341569"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/categories?post=341569"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/us-ny\/wp-json\/wp\/v2\/tags?post=341569"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}