At long last, Downtowns best office buildings are booming with activity

Midtown’s best buildings are signed for.Now, even second- and third-rate offices are fast disappearing from the market, as 5.5 million square feet of workspace is converted for residential use.

But there’s a big winner from the crunch: Lower Manhattan. “Midtown has become incredibly tight for large tenants looking for quality space,” said Jonathan Mazur, a research analyst with Newmark.“Downtown has always been the more cost-effective market and has the most opportunity for large tenants to lease.”There is lots of room for upside because last year, downtown had the lowest amount of leasing ever recorded. “Those of us in the market are now witnessing and participating in robust activity,” said John Wheeler of JLL, noting that the current pipeline for both subleases and direct deals is huge.

“Twelve months from now you will be seeing a lot of stories about leases and ask, ‘Where did that come from?’ ”Jane Street Capital, for instance, lapped up 983,791 square feet at Brookfield Place with its 600,000-square-foot expansion at 250 Vesey St.This caused the building owners, Brookfield Asset Management, as well as other tenants, to move out of the way.

The CollegeBoard for one, will move within the complex to 41,000 square feet at 225 Liberty. At 1 World Trade, two tenants are nearly doubling in size. “We became the largest diverse TAMI [technology, advertising, media and information] community in all of New York and are starting to see a higher percentage of deals with finance and for first time, have two leases pending with two law firms,” said Eric Engelhardt of Durst which owns and manages the property for the Port Authority of New York and New Jersey. One tenant is taking its first city office and another is relocating from the area.“The views and amenities are appealing to them,” Engelhardt said. Additionally, Axsome Therapeutics subleased an additional 48,000 square feet from Condé Nast bringing its occupancy to 96,000 squa...