Pre-built retail spaces: concept draws market.

In order to attract more tenants in a down market, New York landlords have adopted a fairly unusual approach to marketing -- fitting out small sections of available space. Although the practice has been around for years, the current vacancy rate has convinced many in the industry that it's better to pocket an extra expense than give up a potential tenant.

The practice seems best suited for 2,000 SF to 5,000 SF spaces, in buildings with small floor plates. Smaller tenants tend to care more about the extra savings, brokers say, and they find it more inconvenient to deal with designers and contractors.

"With the number of vacancies and available subleases out there, landlords need to differentiate their properties," said Mark Lauzon, managing director of the strategic services group at Cushman & Wakefield.

"With the pre-built it's easier for a tenant to move right in and it's a huge selling attraction. Small law offices and financial services firms tend to like it the best because they don't have the time and money to do it themselves."

Lauzon, who has been marketing pre-built spaces at such buildings as 888 Seventh Ave. and 625 Madison Ave., finds that it moves off the market much faster, giving class "A" landlords an advantage over their sublease competition.

"We pre-built three small units at 888 Seventh Ave. and they've all been leased in a matter of weeks," he said. "In the current market it doesn't pay not to do it. It accelerates leasing and it's a very effective marketing tool."

Scott Landis, of the Landis Organization, who has undertaken a pre-built program at his building at 1370 Ave. of the Americas, feels that a finished look gives office space a more upscale feel and has better chances of catching a tenant's eye.

"When you've got raw space in smaller units people have difficulty visualizing what it will look like when they move in," he said. "Plus, with a pre-built, a tenant can be up and running in a matter of weeks. For example, we signed two leases at 1370 Ave. of the Americas with shoe companies that needed space in time for a June shoe show. If we didn't pre-build, we would have lost the tenants."

According to Stephen Eynon, of Insignia/ESG, who has been marketing the building on behalf of the Landis Organization, pre-building is a matter of supply and demand.

"You can sit there with raw space right now because you will lose to a sublet," he said. "You really need to cast as wide a net as possible. You are basically forced to do it."