There has been a shortage of good, small office space in Manhattan for the past 5 years. The trend was caused by landlords seeking to consolidate smaller units of office space into full floors for 2 reasons. First, the assumption was that they would get better (safer) tenants if they were large rather than small. Second, with a consolidated full floor tenancy, the landlord has a single entity to deal with from an ongoing management standpoint.
I think that trend is about to reverse itself and soon we will see landlords welcoming new small office space users with open arms, because the larger tenants are starting to leave Midtown in favor of modern new office space in Hudson Yards or Downtown at the World Trade Center buildings. The result of this exodus is that there are now large blocks of space in midtown lying fallow because there are no longer large block users interested in space in an older building with many columns, constricted ceiling height, old systems and lobbies. And even after being "spruced up", these multi floor units in older buildings just don't hold the same appeal for tenants whose workforce weighs towards Millennials (who will comprise over 50% of the total workforce by 2020).
We anticipate that the pendulum is about to swing in the other direction - and that landlords will start competing to attract smaller tenants as they break up their big blocks of unrentable midtown office space. We'll see marketing campaigns about buildings that cater to smaller tenants and many of these landlords will open their own brands of co-working and office-sharing facilities.
These factors indicate better days ahead for small office users in New York City. We're coming out of an era where the small tenant was treated with disdain, into a new time frame when small tenants will be the "meat and potatoes" for many landlords that formerly would not have considered them.
Here is a good example of small office space in the 2,000 s. ft. range, proximate to Grand Central Station (actually connected to the station) that is new construction in move in condition for small tenants.