Diamond District tenants worried about rent increase

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Diamond District tenants worried about rent increase

July 11, 2008

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New York—Concerns are growing among tenants in New York City's Diamond District that rents could be on the rise in their longtime neighborhood, according to an article in The New York Times.

The July 9 article states that although the district is situated between some of the costliest office space in the country, many tenants pay only a fraction of the rent paid by their neighbors on nearby blocks.

However, new development is stirring concerns among diamond dealers, jewelers, retailers, cutters and polishers alike that this soon could be changing.

The Times article states that in recent months, developer Gary Barnett, president of Extell Development Co., the company constructing the new $434 million Diamond Tower in the district, has bought up several older buildings near his construction site.

"Tenants are concerned that they are going to get priced out of the neighborhood," Fran Reiter, who served as deputy mayor under Rudolph Giuliani and is now consulting for the 47th Street Improvement District, told the Times. "There is unease and trepidation about what the future holds for the industry.

Indeed, the Times reports that a dozen tenants already had to vacate 2 W. 47th St., where rents jumped from $16 a square foot to $40 a square foot when the building changed hands.

Keith Lipstein, managing director of ABS Partners, the operator of the building, told the Times that the rent hikes reflect current going rates for real estate in that area.

The Times quotes Lipstein as saying, "I'm sorry my space is expensive, but this is 2008, not 1978."

The Diamond District encompasses the block of West 47th Street between Fifth Avenue and the Avenue of the Americas. It has been New York City's home to the jewelry industry since the end of World War II, when the industry migrated north from Canal Street and the Bowery.

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