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The possible future of the Union Square neighborhood — and, perhaps, other business districts in Manhattan — is on display on 14th Street and Irving Place.
There, a new building called Zero Irving has been almost completely leased in two years, attracting tenants like the payments company Melio, an AI company called Sigma Computing, the digital bank Lauren Road and the well known tech venture capital firm Sequoia — all paying more than $100 a square foot a year, much higher than the $78-per-square-foot average for Manhattan.
And it’s not only office tenants. The bottom six floors of the building have been set aside for the training center Civic Hall’s ambitious programs to prepare New Yorkers for jobs in the high-paying tech sector.
“There is no better location for a live-work neighborhood,” said Josh Wein, managing director of Zero Iving’s developer, RAL Companies and Affiliates. “There are a lot of residential buildings and then there are the workers coming from Brooklyn and other parts of Manhattan.”
A little over a year ago, the New New York panel convened by Gov. Kathy Hochul and Mayor Eric Adams called for reimagining business districts for the post-COVID lockdown world, emphasizing the need to combine commercial and residential uses. Neighborhoods in Brooklyn are well on their way to achieving that, but in Manhattan only Union Square has taken steps to achieve that vision.
“The New New York plan calls for reimagining central business districts as vibrant, 24-hour, live-work neighborhoods,” said Julie Stein, executive director of the Union Square BID and not coincidentally the former executive director of the New New York panel. “Union Square has those building blocks: a focus as a job center in tech, education, and medicine, a robust residential community and a destination for arts and culture.”
While Zero Irving and other signs of rebound from the pandemic are promising, there remains a big gap between where the neighborhood is today and where its boosters want it to go with office leasing no better than the rest of Manhattan and too many vacant retail storefronts.
The area within half a mile of Union Square Park boasts 144,000 workers, 60,000 students and 72,000 residents, according to the BID.
Industrious, the third largest flexible leasing company in the world, recently opened its second location in Union Square at 860 Broadway and in just a few months reached 65% occupancy.
Its other space at 215 Park Ave. is at 80% occupancy compared with a citywide average for flexible work spaces of under 40%, with a mix of entrepreneurs, small startups and New York outposts of large companies who see the location as a convenient gathering spot.
“We could support 10 locations in Union Square,” said Liz Simon, chief operating officer of the company. “People live there, want to commute there and want to do other things there like shop and go to places.
And while the residential population is a building block, the real strength of the area is the 14th Street subway station, the fourth busiest in the city, and its restaurants and other nightlife.
Consider the payments company Melio at Zero Irving. Its U.S. workplace manager Dana Leshem walks to the office, but 96% of its 130 New York employees commute from elsewhere mostly by subway.
Attracting companies like Melio will be crucial to the area’s future. The Israel-based company, which provides a way for small businesses to pay all their bills, opened a small office in New York shortly after its founding in 2018, eventually settling into a space at a WeWork. They scattered during the COVID shutdown but as the pandemic eased the company began looking for a permanent home.
“We knew we wanted to open an office not only for our 9 to 5 work but where we could build a community with our users who could come to the office,” Lesham said. “Zero Irving was an easy place to commute to and it has that community feeling with the park.”
For all the success of the $250 million Zero Irving, the overall Union Square office market is no better than the rest of Manhattan, with a vacancy rate of 23%, according to the brokerage firm CBR. In Manhattan, the average vacancy rate is just about 20%.
The problem is actually the neighborhood’s success in becoming a haven for tech and tech-related advertising firms, said Zack Redding, managing director of Colliers Capital Markets. Many landlords upgraded older buildings in the years before the pandemic and need to charge at least $75 a square foot to earn a profit. Somewhat less desirable buildings in nearby neighborhoods can be rented at lower rates, a big factor for companies looking to lease space in an uncertain economy.
The streetscape has received a boost with both Target and Crate & Barrel opening new stores late last year. Still, the area is saddled with some 20 major ground floor locations available for rent, according to the real estate firm Cushman & Wakefield.
Part of the problem is that a boom of illegal cannabis shops that flooded the area discouraged other potential tenants, said Virginia Pittarelli of the brokerage firm Retail by Mona. With a recent crackdown, the area is becoming more attractive, and she expects a series of high-profile signings this year and that is the metric Stein is tracking to show Union Square is improving.
The future of the area may depend on two key steps the BID is asking the city to take. The first is the expansion of the 14th Street Busway which keeps cars out of bus lanes between Third and Ninth avenues and improves crosstown travel times.
Its more ambitious goal is to modernize Union Square Park, which hasn’t had a major facelift in more than 15 years, and improving pedestrian access, all part of a $100 million plan it has proposed to the city.
“Union Square has all the building blocks of success,” Stein said, “Addressing the district’s unmet public realm needs will solidify its future as NYC’s model mixed-use neighborhood and quintessential modern business district.”
read original article by Greg David at The City
