What do Buzzfeed, Yelp and Hulu have in common?
Besides their widespread success in online media, they have joined the growing number of technology, advertising, media and information (TAMI) companies that now call Union Square home.
In key cities across the U.S., TAMI firms have been a significant source of commercial growth and competition in central business districts. And in New York City, Union Square has emerged as one of the more rapidly developing neighborhoods for these industries.
With TAMI firms driving leasing competition, office vacancies in Midtown South (defined, for real estate purposes, as the swath of Manhattan between Midtown and Lower Manhattan) have now reached their lowest level in seven years: The average asking rent in Midtown South has climbed to $83 per square foot for Class A space and $76 for Class B space, according to real estate services firm DTZ.
“We’ve been seeing a significant increase in technology, advertising and media firms coming to the area since 2011,” said Jennifer Falk, executive director of the Union Square Partnership. “With all of the activity over the last year, Union Square really has become the epicenter of New York City’s tech and creative scene.”
Buzzfeed’s move to 225 Park Ave. South marked one of the biggest leases of the year, not only in Union Square, but in all of New York City. Launched in New York in 2006, the digital media powerhouse now employs more than 900 people in 10 bureaus around the globe. Its new Union Square headquarters occupies 194,000 square feet on the 11th to 16th floors of the 19-story tower at an asking rent of $85 per square foot.
Buzzfeed joins a number of leading media and tech firms that have taken up residence in Union Square. In the last year, Yelp expanded its Fifth Ave. office to 70,000 square feet, while Spotify’s headquarters has grown to 123,000 square feet just a few blocks away. In late 2014, The New Republic magazine signed a deal for a 7,000-square-foot space fronting on the square. Digital advertising and media-management software developer Centro Inc. is leasing two full floors at 841 Broadway, bringing the building to full occupancy. And after outgrowing its Sixth Ave. office, tech-focused residential brokerage firm Compass leased a second space at 19 Union Square West.
North of the square, 114 Fifth Ave. (at 17th St.) has seen a flurry of activity in 2014, as well. The 330,000-square-foot century-old 18-story remodeled office tower has become the new home of advertising agency AKQA, news Web site First Look Media, Gawker Media and Capital One. These companies join the building’s tech tenants — such as Mashable, which leased its new headquarters in the building last spring — and MasterCard, whose 58,000-square-foot technology lab houses employees involved in research, development and software design.
So what is the neighborhood’s draw for tech and creative companies? Union Square’s unique combination of convenience, office amenities and creative culture seem to be the answer.
Steps away from one of the city’s largest transportation hubs, Union Square offices are easily accessible to employees who live in Manhattan, the outer boroughs and New Jersey. Add in the neighborhood’s abundance of restaurants, nightlife and a high concentration of fitness studios and healthy eateries, and you have a very appealing environment for professionals who want to maintain a creative, active lifestyle.
Inside the offices themselves, the square’s open, loft-like spaces have played a big role in driving leasing momentum for TAMI tenants.
“A lot of offices in this area have qualities like open floor plans, high ceilings and large windows that appeal to creative personalities,” Falk said. “Many of these firms, particularly start-ups, are looking for large spaces, but they don’t want to be in a traditional office setting dominated by fluorescent lights and cubicles. It’s important to them to maintain a creative vibe, and offices in Union Square are very conducive to that kind of environment.
“For years, Union Square has been home of architecture firms, publishing companies and marketing groups,” Falk added. “There’s a lot of creativity here, and the start-ups that are moving in like to be around other like-minded professionals.”
With new tenants arriving regularly, eager speculation abounds as to who will be next to join the Union Square community.