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Fund Managers Say Goodbye to Stodgy Midtown
Hedge funds and other alternative asset managers are going with flashy new construction in the neighborhoods of Midtown South and the East Village.
Tikehau Capital, a French asset manager that's aiming to be the Blackstone Group of Europe, is among a new wave of alternative investment firms shunning traditional neighborhoods in Midtown in favor of newly constructed offices in offbeat areas of Manhattan.
Fund managers are looking at locations like Midtown South, just north of Union Square, and the Meatpacking District, according to the most recent hedge fund activity report from real estate firm Jones Lang LaSalle. Hedge funds, private equity firms and other alternatives managers are relocating from Midtown areas such as the Plaza District, which has the famous 9 West 57th Street building with unobstructed views of Central Park at its center.
In February, Tikehau signed a lease for 10,000 square feet in Rockpoint Group's 412 West 15th Street, according to JLL. RTW Investments, which invests in health care companies, and Kimmeridge Energy, a private equity firm focused on the energy sector, will also move into the building. CBAM Partners, a credit manager founded by investment veterans from Och-Ziff Capital Management Group, is among the firms heading downtown to a building at 51 Astor Place in the East Village.
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Cynthia Wasserberger, who focuses on financial services firms at JLL, says new construction generally commands a 25 to 35 percent premium over the highest quality buildings in Manhattan. She expects movement to continue from Midtown neighborhoods, as there's a healthy pipeline of new construction that's designed to attract boutique firms.
Among the new downtown offices under construction is Vornado's 512 West 22nd Street, which is west of 10th Avenue in Chelsea, and CBSK Ironstate's 363 Lafayette Street, a 10-floor building in the East Village. Both buildings are expected to be completed later this year, according to JLL.
Hudson Yards, the massive development on Manhattan's West Side rail yard, continues to draw financial firms with its new construction and open spaces.
Late last year, Engineers Gate, a quantitative manager founded by Glenn Dubin, who also co-founded Highbridge Capital Management, signed a lease for 55 Hudson Yards. Arosa Capital Management, an asset manager in the energy sector, and HealthCor Management, which invests in health care and life sciences companies, also said they would move to 55 Hudson Yards.