Manhattan Offices Still Largely Empty
But residential tenants seeking upgrades are driving apartment rents up.
At the end of summer, the Manhattan office occupancy rate—the number of people in on a given day—was only about 20% on average, according to data from Cherre.
Things improved by November, as new survey information, obtained from October 19 through 29 from major employers by the Partnership for New York City, suggests. But not by that much.
On an average weekday, only 28% of workers are in situ. More than half (54%) remain fully remote, and the other 46% range some number of days during a week. Only 8% were back in their offices five days a week.
Employer expectations are that by the end of January 2022, 57% will be back in the office at least three days a week while 21% will stay remote only, which isn’t good news for office property owners.
“A third of employers expect that their office space needs will decline over the next five years and 13% anticipate a reduction in jobs located in New York City, with the greatest job losses in the financial services industry,” stated PFNYC in its post.
As experts have been telling GlobeSt.com for some time, the biggest impact of office declines is likely to be in B- and C-class space, while premium office space will continue to attract and keep people.
“As you look across the city, New York has a lot of B and C buildings that no one’s going into,” Cherre co-founder LD Salmanson told GlobeSt.com at the beginning of September.
The medal for best attendance goes—to the real estate industry, as the PNYC survey indicates, with an expected average daily presence of 80%. Things fall off quickly after, with law firms looking for 61% attendance and financial services firms, 47%.
Lower attendance is expected by accounting (36%), consulting (30%), and tech trailing behind (24%).
Attendance is also inversely connected to business size. With fewer than 500 employees, 39% are there now and 58% are expected by the end of January; more than 5,000, 28% are there now and 46% expected in early 2022.
Given the current disparities between A properties on one side and B and C on the other, all these numbers likely have a bias towards newer and nicer facilities.
In a contrary move, Manhattan rents are spiking, up 18% year-over-year in October, according to a report from appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate, as reported by Bloomberg. The rents are still below October 2019 levels.
Driving the growth is tenants who want to upgrade to nicer digs on the assumption that they’ll be going back to the office.