As firms compete for luxury office space, its feast or famine for building owners

It’s a tale of two cities.While ultra-luxury office towers in hot ’hoods are seeing massive asking rents of up to $300 per square foot, side-street buildings are lucky to rent for a mere tenth of those prices.

On average, Manhattan asking rents are roughly $77 per foot, according to CBRE, but many basic office buildings are getting just $40.“The momentum is only going one way,” said Ben Friedland of CBRE.“The financial firms are looking for every possible advantage and one is working together.

So the mandate is for groups to be back in the office.That pent-up demand is coming into the market.”That demand is for larger offices on higher floors.

So rather than nabbing two, 20,000-square-foot floors, companies are leasing 40,000 square feet, said Friedland: “We are seeing fewer companies taking an adjacent floor and instead, they prefer to be on one larger floor.”So many penthouse-level trophy offices are now leased that 80% of available space in Manhattan is now on lower floors, according to Benjamin Bass of JLL.Adding to the pressure, large tenants with leases ending between 2030 and 2032 are now out exploring the market.“No one is developing any new product now and it’s tightening the market,” added Bill Elder of RXR, a large property owner.

“There are many in the midst of LOI’s [letters of intent] or leases and others are just starting to look.The market will get some traction and it will create a little frenzy.”At Vornado and Related’s 85 Tenth Ave., Google just renewed 300,000 square feet.

At the same time, it’s putting up a similar amount for a short sublease at 345 Hudson St.as it congeals its occupancy along the West Side Highway and its new 550 Washington St.

headquarters.Luxury fashion conglomerate LVMH has already leased 150,000 square feet at 550 Madison Ave.— now it’s gobbling up another 150,000 square feet in the former IBM building at 590 Madison Ave.

The building, which connects to a stunning trapezoidal atriu...