Observatories: A Lucrative Observation - Barry Moss
On top of the world. That’s the only way to describe how it feels to lord over Manhattan and beyond from one of the many observatories that cap some very famous New York skyscrapers.
Aside from giving visitors an awe-inspiring look at what’s outside, landlords have also come to offer the decks’ inside spaces for private events, and installations that educate and entertain.
But I see so much more potential and believe more office towers should embrace the observatory feature.
My revelations on the subject of observatories come from my 30 years as a high-ranking executive, as well as two articles that caught my eye.
The first appeared in the Wall Street Journal. Titled Pension Funds Are Selling Their Office Buildings, it reported that post-pandemic, institutional investors are putting less money into office buildings because many remain empty due to the continued work-from-home culture.
The second that resonated with me was in Barron’s and called New York City’s Sky-High Views Are Cash Machines, which noted: “…institutional money is wading into the fray, drawn by the steady cash flow produced by observation towers.”
Of course, it acknowledges that premium tickets come with perks like glass elevator rides and glasses of Champagne; expedited entry can cost between $63 and $113 — and the sky’s the limit (pun intended) for special packages like marriage proposals.
What was of more interest to me though is that “the growth of the [observation deck] market, as well as the recovery of tourism, [is] contributing to strong early performance for its investment,” as well as the fact that “…lenders and investors recognize these are institutional-grade investment assets.”
To see the value of the observatories, I, as a senior advisor and business strategist whose job it’s always been to provide key financial and business insights, think landlords need to look beyond the “fun attraction” aspect.
First and foremost, the activity happening on the top floor can have a major impact on the ground floor. With all the extra people that the observatories bring into that building, the street-level retail shops will experience more much-needed traffic. This constant flow of crowds with cash is also an impressive selling point when trying to rent empty retail spaces, of which there is a growing number.
Next, there’s no denying an observatory can be an additional as well as essential marketing tool. Envision a kiosk at the building’s highest level that highlights the landlord’s other properties and generally brings a shine to the firm’s brand. I can just hear visitors saying, “I didn’t know the company that owns this building also owns…” as they recite a litany of other impressive properties, then adding, “We should go take a look.”
Lastly, with office properties under financial pressure, this income sideline which has become very lucrative could be an exciting repositioning and means of revitalization.
