The view from the 3,300-square-foot rooftop patio at 160 Fifth Ave. appeals to architecture buffs and urban voyeurs alike. The upper reaches of the landmarked Empire State, Flatiron and Clock Tower buildings dominate the vista from one side. Turn around, and you’re peering into the windows of the office building next door.
“It’s so New York,” says Richard Farley, director of leasing at RFR Realty, the building’s owner, as he stands in the middle of the nearly-completed space bordered in boxwood shrubs.
Despite rising vacancy rates and lackluster tenant demand all across the city, that garden—and the promise that it will be open to all tenants—has helped RFR lease up half the building which is nearing the end of a two-year, $30 million gut renovation.
Eager for their properties to stand out in a crowded market, more and more landlords are landscaping setbacks and rooftops to transform formerly desolate spaces into alfresco amenities. In headier days, landlords did it to raise rents on offices attached to private outdoor space by as much as 15% per square foot. These days, such premiums are rare, but landlords have found a fresh rationale. They are embracing outdoor space as a perk that can help their properties to stand out.
“In this economy, anything that landlords can do to add value is a plus,” says Mark Boisi, chairman of Colliers ABR.
Vornado Realty Trust, one of the city’s largest landlords, is among those doing just that. It is turning three setbacks into terraces at 330 Madison Ave., having recently completed similar projects at two of its other Manhattan office towers. Meanwhile, 200 Fifth Ave., 160 Fifth Ave. and 545 Madison all boast tenant-accessible, spruced-up outdoor space as a result of top-to-bottom overhauls.
Renovations at 100 Park Ave. and 444 Madison Ave. also created terraces, and a trio of new buildings at 510 Madison Ave., 11 Times Square and 15 Little West 12th St. also offer outdoor space.
“There’s not a building in the city that isn’t at least considering fixing up a roof or setback,” says Dan Shannon, principal at Moed de Armas & Shannon, the architectural firm that designed the roof at 160 Fifth Ave.
But terraces are not for everyone. While terraces can be relatively inexpensive, costing as little as $100 to $200 a square foot to build at some buildings, at others the price can be prohibitive. In order for tenants to use a rooftop, it must have at least two exits, notes Mr. Shannon, who points out that adding a second one can be costly. Similarly, rooftop water tanks and air conditioners can hog too much room or produce too much noise to create a pleasant environment.
Owners doing gut renovations of their properties or building new ones can simply design around such problems. For example, when RFR retooled 160 Fifth Ave., it extended the elevator shaft by a full story, bringing it all the way to the roof. Likewise, when landlord LCOR Inc. gutted 545 Madison, it added three terraces to the two that had been original features in the building.
That effort already seems to be paying off. While the building is leasing up more slowly than LCOR had originally forecast back in headier times, the first two of the three tenants who have signed on leased offices that boast access to a private terrace.
“I’d love to tell you we were getting a premium rent [on the terrace space], but we’re not,” says David Sigman, senior vice present and principal at LCOR. “But they are bringing in a lot more interest.”
Similarly, David Falk, president of New York tristate region at Newmark Knight Frank, expects the rooftop patio and terraces at the building he represents at 15 Little West 12th St. will prove to have catnip-like qualities for a fashion company or other image-conscious tenant who wants to be in the hip meatpacking district. He notes that the 8,000-square-foot rooftop space will only be available to the tenant that leases the top floor.
“This is a space for someone who wants to make a statement,” says Mr. Falk. “It is a real ego feature.”