Unraveling Office Leasing in the Garment District

In the late 19th century, the Garment District emerged as a bustling hub of the fashion industry, synonymous with the clatter of sewing machines and clothing racks filled with garments pushed along the streets in every direction. Soon, the area was packed with high-density loft buildings, each floor teeming with skilled tailors and seamstresses (or sewists as they are now known). 

These buildings, characterized by spacious, open floor plans, were built to house rows of sewing machines and large cutting tables. The workers transformed bolts of fabric into the latest fashions worn from Fifth Avenue to the Champs-Élysées. The production of ready-to-wear women's clothing, particularly dresses, blouses, and skirts, spurred the industry; this was a departure from the custom-tailored clothing that dominated the previous era. New York City quickly became the epicenter for textile manufacturing and garment production. 

The garment business thrived for decades. It was so good, in fact, that many owners purchased the buildings where their businesses operated. Of course, these buildings were more affordable back then, so it made sense. The foresight to invest in the NYC real estate market helped create stability for their businesses and, as an unintended consequence, created generational wealth for many of their descendants who are rent collectors for the buildings today. 

While there is very little manufacturing in Manhattan today, we still occasionally see a garmento pushing a rack of coats along West 38th Street or catch a glimpse of a sewing machine through an office window. 

The glory days of the Garment District may have passed, but the city's connection with fashion and design continues to flourish.

WHERE IS THE GARMENT DISTRICT IN NYC?

New York City's Garment District is located in the southwest portion of Midtown Manhattan, between Penn Station and Hell's Kitchen, and Sixth Avenue and Ninth Avenue. 

The Garment District has several intriguing landmarks and well-known sites. Among these is the Port Authority Bus Terminal, which, according to its website, transports around 200,000 people daily, making it the busiest bus terminal in the world. It's been the butt of many jokes over the years, such as when Mayor Michael Bloomberg commemorated Conan O'Brien's 16th anniversary in New York with a 'key' to the men's room at the Port Authority. 

Welcoming visitors at the entrance of the Port Authority stands a statue of Ralph Kramden from The Honeymooners, a nod to the character's iconic status as a New York City bus driver. Many passersby must think the statue is a celebrated real-life bus driver, not a TV character from the 1950s. 

Macy's flagship department store is also located in the Garment District and takes up an entire city block between Sixth and Seventh Avenues on 34th Street. Even if you've never been, you might recognize Macy's from your TV set, as it marks the grand finale of the Thanksgiving Day Parade every year. 

Situated at the intersection of Seventh Avenue, also known as Fashion Avenue, and West 39th Street stands an homage to the Garment District: a pop art sculpture made of stainless steel and aluminum of a needle threading a gigantic yellow button. 

Walking down Fashion Avenue, you'll discover the Fashion Walk of Fame, where the names of honored icons like Ralph Lauren, Halston, Diane von Fürstenberg, Calvin Klein, Perry Ellis, Anne Klein, Oscar de la Renta, and Isaac Mizrahi are embedded on stars in the sidewalk.

What's the Garment District like today

The heyday of the Garment District passed, and the manufacturing business, for the most part, moved overseas. Therefore, it might come as a surprise that the Garment District remains a hub for the apparel business. Clustered within select buildings along Broadway, Seventh Avenue, 38th Street, and 39th Street, fashion showrooms display their wares for wholesale buyers who travel from around the country to see them in person. 

These buyers often work for department stores or boutiques. They might visit dozens of showrooms in the city on a given day. It's a tactile business—they touch the fabrics, inspect the seams, and assess the dies and colors. A Zoom meeting won't cut it. If they see a shirt or a pair of blue jeans they like, they may order a few thousand units. 

PR firms specializing in fashion often rent office space in the Garment District. These companies might handle the social media, websites, and branding for a fashion label. They rent office space here to be near their clients; they're part of the fabric of the community, so to speak.

And if you're in the area, check out the local flavor—literally. Zeppola Bakery at 499 Seventh Avenue has exquisite pastries, sandwiches, and pizzettas (small pizzas). Skip the dollar slice and try Zeppola. Once you taste it, you might have to rent office space in the Garment District just to be nearby. 

Major Fashion Brands Located in the Garment District

If you have a fashion business and you're looking to rent office space, you'll be in good company in the Garment District. While countless small fashion brands and multiline fashion showrooms exist, many big players are also located here. 

You can't walk down Fashion Avenue without seeing DKNY emblazoned across a row of second-story windows. Prominent companies like PVH Corp., the parent of iconic brands Calvin Klein and Tommy Hilfiger, and labels such as Carolina Herrera, Oscar de la Renta, Liz Claiborne, Nicole Miller, and Ben-Amun all contribute to the Garment District's reputation as a global destination of the fashion industry.

The Variety District

While many fashion showrooms exist in the Garment District, the neighborhood could also be called the Variety District, seeing as all kinds of companies rent office space here. There are law firms, architecture firms, consulting companies, technology companies, real estate developers, healthcare providers, dance studios, recruiting agencies, coworking spaces, and just about every other type of business. 

Most companies are looking for the same thing when they decide to rent office space in the Garment District, and that is, they're looking for a great deal. Unlike Midtown, the Flatiron District, or Soho, in the Garment District, you'll find offices with the lowest price per square foot in Manhattan (and when I say Manhattan, I mean below 60th Street because that's where the vast majority of office space is found).

Why do the offices in the Garment District present such exceptional value for companies looking for space? 

There are a couple of reasons. First, it is a very dense area with hundreds of office buildings. There are cavernous valleys with 20-plus-story brick office buildings everywhere you look, many with more than 20,000 square feet per floor. Second, the buildings tend to be of older stock.

While many have been updated in some way—renovated lobbies or elevators, for example—most buildings in the Garment District are Class C. They're perfectly functional office buildings but don't have the bells and whistles that premium office buildings have, like double-height lobbies, state-of-the-art elevators, and ultra-modern bathrooms. So, the ample supply and often lackluster building quality in the Garment District tends to keep the rents low. 

But hey, if your priority is to keep office expenses low—not to impress snobby clients with a luxurious NYC office—you can find decent office spaces at a very low price-per-square-foot in the Garment District, ones that will keep your CFO happy. 

Tips for Finding Office Deals in the Garment District

Before the pandemic, it was rare to find offices in the Garment District priced between $30 and $35 per square foot, but these days, it's not unusual. If building quality is less of a priority than finding an office with a low price per square, then concentrate your office search between 8th and 9th Avenue. Asking prices in this part of the Garment District are down as much as 25% from 2019 pre-pandemic levels. 

Office prices in the Garment District increase as you move east of 8th Avenue. Sure, it's still possible to find super low rents here, too, depending on the quality of the building and the quality of the office space. But the average office rents in this quadrant will be slightly higher.

The best office buildings in the Garment District are on Seventh Avenue and Broadway. Premium office spaces on these avenues typically command double the price per square foot of comparable options located further west on side streets. So, there is something for everyone in the neighborhood. 

The best way to find office deals in NYC—not just the Garment District—is to do your research, or rather, hire an experienced real estate broker to do the office research for you. 

Here is a list of things to expect from a NYC real estate broker:

1. Market Analysis and Insights: A real estate broker can explain current office market trends, including average lease rates in a particular area, office demand in a specific building, and standard rent concession packages. They'll also explain the norms of office leasing in NYC and commercial real estate terms like the Good-Guy Guarantee and Loss Factor. 

2. Identify Potential Office Spaces: This is why most companies hire a real estate broker—simply to find office spaces for rent. There are many office space websites out there, so it's certainly possible to find an office on your own. Brokers use websites, too—mainly pricey multiple-listing services that include all active office listings. But an office broker’s most valuable resource is their rolodex. Having the ability to call dozens of other brokers, management firms, and landlords and say, Hey, I have a tenant looking for a 3,000-square-foot furnished office space in Midtown with great light—whaddya got? is an asset. In other words, brokers use their network to find office spaces that match your specific office requirements—size, location, budget, etc.  

3. Schedule Office Tours: The first part is scheduling. If the market allows, we like to show 4-5 offices per tour. First, we determine which spaces you want to tour. Second, we figure out which order would be best: where do we start, where do we end? Third, we confirm a starting time and where to meet. Fourth, we verify and confirm the showing instructions for each location: are we meeting another broker there (and are they available at that time), are we seeing the super at the freight elevator, or is the space vacant and the door unlocked? Fifth, we reconfirm everything on the morning of the office tour. Sixth, we guide your team through the offices, pointing out things that might not be obvious: Is the electricity directly metered, submetered, or a flat rate? Seventh, we try to make it look easy. 

4. Negotiate Lease Terms: An office broker will use their experience and knowledge to negotiate the most favorable lease terms, including base rent, lease length, base rent escalations, free rent, landlord's work, real estate taxes, and additional clauses tailored to the company's specific needs. This information is put into a non-binding Letter of Intent and submitted to the landlord for their review. 

5. Review Lease Documents: Before passing along the lease document to your attorney for review, a real estate broker will verify that the business points in the Term Sheet (i.e., the mutually agreed Letter of Intent) align with what is represented in the lease documents. Your real estate attorney will then carefully review the document and suggest changes (i.e., lease comments) that best represent the client's interests. A broker should also be able to recommend a few real estate attorneys should the company need one.  

6. Facilitate the Move-In Process: A few critical documents must be in place before moving into a new office space. First, the landlord must approve the tenant's Certificate of Insurance (COI). Don't wait until the last minute to do this because it's usually not correct the first time, no matter how hard you try. Second, the movers and other contractors must also submit a Certificate of Insurance. Third, the new tenant must complete the tenant contact form, which lists emergency contacts for the company and other basic info. Additionally, carting services are scheduled, office keys are delivered, and an introduction to the building management and superintendent is made. 

7. Ongoing Consultation: This is more important than it may seem. Your broker is your resource for the NYC office market. You might want a quick snapshot of the office market or want to know specific happenings in your neighborhood: Is a new building going up that you'd like to know about? Is an old building on your block about to be demolished? How many office spaces are available in your building? What's the current asking price? Do you want to sublease your office space and move to a larger office in another neighborhood? Having a dependable real estate broker can be an invaluable resource. 

One more thing. In Manhattan, it's customary for the landlord to pay the real estate commission to office leasing brokers. So, everything listed above doesn't cost you a cent. 

Every neighborhood has its own unique personality. The Garment District can be a little rough around the edges, but the price is right. Offices in Soho are thought to be chic but pricey. The Flatiron District is NYC's tech hub. Midtown is where the Masters of the Universe work. And the Lower East Side is cool but mostly residential. Whichever Manhattan neighborhood you prefer, we're here to help you find an office space you'll thrive in.