Manhattan is observing rising office vacancy rates.
A report from Newmark covering the downtown Manhattan office real estate market during the second quarter of 2021 indicated that despite plummeting rental prices, the availability rate for businesses reached 21.1% in June — a record high. Reports for Midtown and Midtown South reveal similarly high vacancies.
The New York Times comments:
No other city in the United States must confront the changing workplace more so than New York, whose offices, before the pandemic, had attracted 1.6 million commuters every day and helped sustain a swath of the economy, from shops to restaurants to Broadway theaters. The pandemic has also placed enormous pressure on the commercial real estate sector, a pillar of the New York economy, as landlords rush to redesign offices and dangle incentives like lower rent to retain and attract companies.
Commercial districts across the country are struggling, but office towers in Manhattan continue to empty out even as other cities, including Atlanta and Los Angeles, show signs that they have moved beyond the worst of the pandemic.
Leaders in the state of New York — and New York City in particular — enforced some of the most aggressive COVID-19 lockdown measures in the United States. As a result, companies and workers fled the cities — some on a permanent basis, and some on a temporary basis due to the advent of remote work.
Wall Street executives are flooding recruiters’ offices with requested transfers from New York to Florida. Companies such as Goldman Sachs have recently eyed new headquarters outside of New York.
Last month, outgoing Gov. Andrew Cuomo (D-NY) told the Association for a Better New York that the city would struggle unless residents promptly return.
“Remember, we have to get people back and we have to get people back in volume,” said Cuomo. “If you were to see a 15% decline of people coming back to New York City, that would have a devastating impact on the commercial market.”
“We need that volume to support the restaurants and the shops, the services,” he added. “It’s not just about your business. It’s about all the spinoff effect economic activity that your workers bring to the surrounding community.”
New York continues to lag every other state in economic recovery following COVID-19 and the lockdown-induced recession. The Back-to-Normal Index, a project of Moody’s Analytics and CNN Business tracking economic rebounds across the country, shows that New York is only operating at 81% of pre-recession capacity — far below the national average of 92%.
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