Posted On February 25, 2026 By Josh Alter
Building Repositioning: Re-Envisioning NYC's Underperforming Assets
The office market is sending a clear signal about what's working … and what's not. Recent market data reveals a striking divergence in how different asset classes are performing. Nationally, Class A properties absorbed 18.5 million square feet in 2025 year-to-date, while Class B and C buildings struggled to maintain occupancy (Colliers US National Office Outlook Q3 2025).
New York's market tells the same story. Manhattan's Class A properties achieved their lowest vacancy rate in five years at 12.8%, while Class A leasing reached 17.9 million square feet year-to-date – the highest January-through-September volume in over three decades (Cushman & Wakefield Manhattan Office Q3 2025). Meanwhile, older Class B and C building stock that hasn't been repositioned isn't leasing at the same velocity, and when it does lease, it's often at significantly discounted rates.
The disparity is understandable: new buildings offer state-of-the-art systems and the creature comforts employees expect. But this doesn't mean older buildings are destined for obsolescence. Strategic repositioning can transform an underperforming asset into a competitive one, if done intelligently.
The Repositioning Blueprint
Making older buildings viable requires significant upfront capital investment, but the payoff is a performing asset that can command competitive rents. The art lies in balancing where and how much to spend. Identifying your target tenant base and creating a market-focused strategy to tailor every decision to that group's wants and needs is critical to repositioning success. Rebranding and marketing become essential, and the brokerage community can help shape and validate that vision. A comprehensive repositioning typically addresses six key areas:
- Lobby and Common Area Transformation – Creating a hospitality-driven, high-end look and feel that signals quality from the moment visitors enter. An outdated lobby telegraphs an outdated building.
- Vertical Transportation Upgrades – Modernizing elevator systems to decrease travel time, increase ride quality, and improve aesthetics. In buildings where tenants make multiple trips daily, elevator experience significantly impacts workplace satisfaction.
- Window and Storefront Replacement – Installing new windows and storefronts that enhance the indoor-outdoor connection and engage pedestrians. Natural light and street-level activation can transform a building's appeal.
- MEP System Updates – Replacing outdated mechanical, electrical, and plumbing systems to operate more efficiently—improving ventilation, enabling high-speed connectivity, and creating a more comfortable work environment.
- Amenity Addition – Incorporating features modern tenants expect: bicycle storage, showers, fitness centers, lounges, conference facilities, rooftop terraces, or other amenities supporting work-life integration.
- Curating the Retail Mix – Retail tenants that are assets to the building can significantly enhance repositioning. For tech companies, maybe it's a coffee shop with craft beverages; for financial services firms, perhaps it's a premium gym. Retailers should reinforce identity and serve tenants' preferences.
Case Study: Strategic Transformation
A compelling example from the Financial District illustrates this approach in action. A multi-million-square-foot office tower faced substantial vacancy when its anchor tenant departed. The ownership had to decide: accept discounted rents for dated space? Or invest in comprehensive repositioning?
They chose transformation. The strategy incorporated infrastructure modernization to meet new construction standards, ground plane activation by converting underutilized space into active retail that served the building's tenant base, premium amenity creation, and enhanced street presence. The result: the repositioned space achieved full occupancy within two years at rental rates exceeding neighboring buildings of the same vintage. The building successfully transformed from a dated single-tenant tower to a competitive, multi-tenant asset.
The Market Opportunity
New buildings and certain repositioned landmark properties are commanding all-time high rents, but there's a substantial market of tenants who can't afford top-tier space yet would pay more than they currently do for a repositioned building in the right neighborhood offering the creature comforts they want. This is the sweet spot: delivering a near-Class A experience at a Class B price point.
Tenants making significant real estate commitments want clarity about what they're getting. They're choosing between best-in-class space supporting talent attraction and operational goals, or cost-efficient space delivering fundamental functionality at compelling economics. Unrenovated Class B space, offering neither premium experience nor value pricing, increasingly finds itself without a clear market position.
The Delicate Balance
Successful repositioning is about the delicate balance of cost and reward. Not every building warrants full transformation, and not every market will support the rental uplift needed to justify the investment. This is why it's critical to surround yourself with a team of professionals, including architects, engineers, brokers, and project managers, who can take the overall vision and make it reality while maintaining discipline around the business case.
The market is rewarding clarity and punishing ambiguity. For owners of underperforming Class B and C assets, the question isn't whether the market is changing – it clearly is. The question is whether to adapt strategically or watch rental rates and occupancy erode. Repositioning requires substantial capital and carries execution risk, but for well-located buildings in strong submarkets, the alternative, standing still, may be the riskiest choice of all.
The market has already decided what works. The only question is whether building owners will respond with strategic clarity or reactive discounting. If you're ready to explore what repositioning could mean for your asset, get in touch with G&T.