Is this the end of expensive office space in New York??

David Goldsmith

All Powerful Moderator
Staff member

JPMorgan to sublet office space as it ponders work-from-home​

Bank marketing square footage at 4 New York Plaza and 5 Manhattan West​

JPMorgan Chase is marketing a big chunk of its Manhattan office space as the company re-evaluates the future of its workforce.
The New York-based bank is looking to sublet about 700,000 square feet at 4 New York Plaza in the Financial District and more than 100,000 square feet at 5 Manhattan West in the Hudson Yards area, Bloomberg News reported. Brokers at JLL are marketing the space.

The move comes as JPMorgan is building a skyscraper to replace its Park Avenue headquarters. The tower will be one of the city’s largest.

“It is too early to comment on specifics as we continue to learn and adapt to this current situation and how it impacts our commercial real estate needs,” Michael Fusco, a JPMorgan spokesman, said in an email to Bloomberg. “We are committed to New York and are planning for the next 50 years with our new headquarters here.”

JPMorgan has been consolidating its New York City workforce while expanding elsewhere in recent years. Chief Executive Officer Jamie Dimon said in a Bloomberg TV interview Monday that a “large portion” of the bank’s workers will permanently be based in offices but that a hybrid model may allow some employees the option to come in part-time or not at all.

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David Goldsmith

All Powerful Moderator
Staff member

That empty feeling: Manhattan office availability at record-worst 15.5%​

February’s leasing activity was half of January’s​

The rise in supply is simply outpacing demand.
Manhattan’s office availability set another unfortunate record at 15.5 percent in February, up 0.6 percentage points from January and 5.6 points from a year ago, according to Colliers International’s monthly market snapshot.

Total space leased in February was 900,000 square feet, down by 51 percent from the volume in January and by 57 percent from a year ago. The total was also 43 percent lower than the 2020 monthly average volume of 1.58 million square feet.

Net sublet availability rose by 1.14 million square feet last month, bringing sublet availability to nearly 20 million square feet, or about 24.3 percent of total availability.
The biggest February lease signing was a 132,094-square-foot renewal by law firm Seyfarth Shay at the New York Times tower, 620 Eighth Avenue, followed by a new 120,809-square-foot lease by Jennison Associates at Fisher Brothers’ Park Avenue Plaza at 55 East 52nd Street. Third was LIM College’s 60,000-square-foot renewal at 216 East 45th Street, owned by Bernstein Real Estate.

Coming in fourth and fifth were fuboTV’s 54,786-square-foot lease and G/O Media’s 52,258-square-foot sublease, both at Vornado Realty Trust’s 43-story office tower at 1290 Sixth Avenue.
In a typical year, some 15 million to 20 million square feet of office leases expire, and tenants start making plans as their expiration date approaches, said Franklin Wallach, Colliers’ senior managing director for New York research.

But future office needs became uncertain as working from home became the norm, and many office tenants opted for a short-term lease extension or postponed decisions altogether.
Signs of recovery, notably vaccine distribution, are reassuring tenants that things are heading in the right direction.
“As there’s more clarity in the air, they would be more likely to — instead of a short-term solution because of not being sure of what’s taking place — re-engage the market,” Wallach said.

But demand is likely to be outpaced by supply in the near future because a big chunk of new office space is scheduled to be added to Manhattan inventory: 1.5 million square feet at Brookfield’s 2 Manhattan West and 1.3 million square feet at Tishman Speyer’s Spiral, both in the Hudson Yards neighborhood, Wallach said, citing CoStar.
 

David Goldsmith

All Powerful Moderator
Staff member

Nearly half of NYC workers won’t return to offices until September​

Majority of employers won’t require vaccination to return​

It’ll still be some time before Manhattan’s office buildings are even close to being full again, according to a new survey of big employers.
Nearly half of the companies surveyed expect that employees will be back in offices by September, according to the report from the Partnership for New York City, which was first reported by Gothamist.

But 14 percent of the companies that responded said they were unsure when a majority of their employees would come back to offices. And at least some of the time, their employees will work remotely, said 56 percent of employers.

As of early March, just 10 percent of Manhattan office employees have returned to the workplace.
The survey also found that 8 percent of employers will require their returning workers to be vaccinated, while 61 percent will not.
“The overwhelming message is that both employers and workers are uncertain as to when they’re going to come back to the office and under what circumstances,” Kathryn Wylde, the Partnership’s CEO, told Gothamist. “From an employer standpoint, they’re very concerned about the mental health, stress, burnout impact of Covid. Many of them feel that they cannot put any more pressure on their employees in terms of the expectation of them coming back to the office, even though most of the CEOs I know would like to have the team back.”

The study, which was conducted between Feb. 24 and March 8, surveyed 174 companies with 209,000 office workers.
The pandemic forced a majority of office workers to switch to remote work at the onset of the health crisis, and some experts believe the trend of working-from-home or work-from-anywhere is likely to continue even after the pandemic.

Prominent companies, including JPMorgan and Salesforce, have taken steps to reduce their real estate footprint in anticipation of the changed world in the post-pandemic era.
 

David Goldsmith

All Powerful Moderator
Staff member

What’s Going to Happen with All that Empty Office Space?​

A big majority of employees in New York said they’d prefer working from home and not return to the office. Companies might not always oblige, but lots of empty office space is now a given.​


 

David Goldsmith

All Powerful Moderator
Staff member

New York City hasn't had this much
empty office space in three decades
Vacant office space in New York City is the highest in nearly three decades and will likely hit "unprecedented levels" in the coming months.
As many companies continue to work from home, data from global real estate services firm Cushman & Wakefield (CWK) shows that the office vacancy rate in Manhattan reached 16.3% in the first quarter of 2021 -- the highest since 1994. That's up from 11.3% a year ago.
The report -- assessing office space in Manhattan -- noted that office space leased since last year has also declined.

Cushman & Wakefield expects vacancies to continue to increase to "unprecedented levels in the coming months." However, the report also notes that rising vacancies will drive asking rents down "substantially."

In fact, Manhattan's overall asking price for rents has declined for the past two consecutive quarters, falling to the lowest price per square foot in three years. But some analysts think that lower rents are not just due to demand, and that costs depend on the situation.

"Landlords have adjusted their expectations and are already being much more aggressive than they were before COVID," said Michael Cohen, president of the tri-state region at Colliers International. "But their specific reactions depend on their individual circumstances. For example, developers of newer office buildings are more likely wait to make deals if they don't want to lower their rents further."
 

David Goldsmith

All Powerful Moderator
Staff member
NY Q1 2021 Manhattan Office Market Report

Manhattan Office Report
Lowest Quarterly Asking Rent Since 2018
At $73.23/SF, Manhattan’s asking rent average decreased – for the fourth consecutive quarter – by 1.6%, the lowest quarterly average since 2018. The asking rent average was lower in Midtown and Downtown, quarter over quarter.

Manhattan’s asking rent average also decreased by 7.9% since the start of the COVID-19 pandemic in March 2020.
The average asking rent also decreased during the quarter in 13 of Manhattan’s 18 submarkets.

Hudson Yards/ Manhattan West ($125.19/SF), Hudson Square
($72.17/SF), Chelsea ($71.19/SF), U.N. Plaza ($67.76/SF) and Insurance District ($58.19/SF) were the only submarkets to post a quarterly increase to the asking rent average. Hudson Yards/ Manhattan West had the largest percentage increase since year-end 2020, by
5.3%.

Meanwhile, the largest percentage decrease to the submarket asking rent average occurred in Tribeca ($81.79/SF), lower by 10.0% since Q4 2020.
The average sublet asking rent ($57.53/SF) was lower by
3.5% since Q4 2020 while the direct asking rent average ($78.31/SF) decreased by 1.0%. Year-over-year, the direct average asking rent declined by 6.9% while the sublet average shrank by 8.7%.The average in Class A product ($80.39/SF) was reduced by 1.2% since December while Class B product ($61.61/SF) decreased by 2.1%, quarter over quarter.

The asking rent average in Class C inventory ($50.52/SF), meanwhile, dropped by 4.1%. Year-to-date, the average weighted rental abatement
period for new deals and expansions grew to 13.5 months compared to 12.7 months as the full-year average in 2020. The average abatement period for renewals increased to 7.6 months compared to 5.3 months in 2020. Meanwhile, the average tenant improvement allowance for new deals/expansions decreased by 9.8% to $107.72/SF, while the allowance for renewals decreased by 21.0% to $27.82/SF.

The gap between asking rents and starting rents grew by a notable margin to 16.7% in year-to-date 2021, compared to the full-year 2020 average of 11.4% and the 2019 average of 6.9%.

Highest Availability Rate on Record
The availability rate jumped by 1.8 pp to 16.1%, the highest quarterly availability on record. Manhattan’spre-pandemic record-high availability rate was 13.9% in
2Q 2003. Availability also rose by 5.9 pp, year-over-year,
representing a 60.4% increase to Manhattan’s supply.

For the first time since 2002, the Manhattan office market experienced seven consecutive quarters of expanding availability.
The availability rate increased across all submarkets –
except for U.N. Plaza (7.0%) and City Hall (13.0%) –during Q1. After Manhattan’s sublet availability – on a net basis – increased by 3.12 million square feet during Q3 2020 and by 3.19 million square feet during Q4 2020, sublet availability expanded by an additional 2.91
million square feet during Q1 2021.
Manhattan’s total sublet availability increased by nearly 80.0%, year-over-year, and as of Q1 2021, sublet space represented nearly one-fourth (24.5%) of Manhattan’s total availability, comparable to the 24.2% share in December 2020.
There were 27 availabilities with over 250,000 sq. ft. of contiguous space – substantially more than 19 during
Q4 2020 – with 14 in Midtown, 8 in Midtown South and 5 in Downtown. Pricing for these large blocks increased by 3.7% to $89.77/SF since December 2020, a 22.6%
premium to the market average compared to 16.4% in Q4 2020.

Net absorption during Q1 2021 was negative 10.98 million square feet, an increase from the 10.62 million
square feet of negative absorption during Q4 2020.0.

Over the last 12 months, negative absorption in Manhattan totaled 32.54 million square feet.

Manhattan’s quarterly leasing volume increased since the previous quarter. Meanwhile, the asking rent average decreased with negative absorption and record-high supply.

The arrival of the COVID-19 pandemic drove New York City’s unemployment rate from 4.2% in March 2020 to a record-high 20.2% two months later.

After July 2020’s 18.8% figure, the unemployment rate tightened for five consecutive months, decreasing by 7.2 pp (percentage points) to 11.6% in December. However, the January and February 2021 unemployment rates were higher, increasing to 13.1% and 13.2%, respectively.

Additionally, in the 12-week period between January 2nd and March 20th, approximately 277,000 initial claims for unemployment insurance were filed in New York City, more than double the number of claims filed during the same period one year earlier (124,000).
 

Noah Rosenblatt

Talking Manhattan on UrbanDigs.com
Staff member
This is when we start hearing how bad it really got and perhaps still is in some sectors. However, I almost wonder if these headlines will start to drastically change in the coming months/quarters given the recovery in sales sector, will the markets be forward looking and only care about the trend ahead?
 

David Goldsmith

All Powerful Moderator
Staff member
These type of commercial transactions tend to be much larger, done more on numbers/less on emotion, and more by Real Estate professionals based on better information. So similarly to how I look at decisions by Sponsors to turn condominium projects into rentals, Extell shedding numerous projects they had in the development pipeline, and various other Sponsors finally dropping prices and moving product, I look more at where the "professionals" are betting their own money as opposed to trying to talk up the market.
 
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David Goldsmith

All Powerful Moderator
Staff member

Manhattan office availability hits record high…again​

April leases signed about half March’s total​

Manhattan’s office market reached another new record last month, but it wasn’t one any landlord would boast about.
Office availability rate in the borough climbed to 16.5 percent in April, the highest it’s ever been, according to Colliers International’s monthly market snapshot. Despite falling Covid cases and rising vaccinations across the city, availability in the borough has steadily ticked up since the start of the year.
April was also the 11th consecutive month Manhattan’s availability has climbed, eclipsing the 16.1 percent record set in March. It also stands in contrast to April 2020, when the figure stood at 10.3 percent, according to the report.

About 980,000 square feet of leases signed last month, down 46 percent from March and 27 percent from a year ago. Leasing volume was also a staggering 75 percent below the pre-pandemic monthly average in 2019.
Average asking rent was $72.97 a foot, down 0.4 percent from March and 8.3 percent from a year ago.
April’s largest lease was pharmaceutical software developer Schrödinger, which signed a 17-year deal for 109,000 square feet at Edge Fund Advisors’ 1540 Broadway.

Another notable new lease was law firm Bracewell LLP’s 54,000 square feet at Paramount Group’s 31 West 52nd Street. With that 16-year deal, Paramount backfilled about 40 percent of its vacancy in the 29-story office tower.
There was one small bit of good news. Net sublease availability across the borough decreased slightly — 30,000 square feet — for the first time since May 2020. Manhattan sublease inventory in April was 21 million square feet, about a quarter of the total office availability in the borough.
 

David Goldsmith

All Powerful Moderator
Staff member
Deutsche Bank eyes hybrid model while JPMorgan plans office return

More bad news for commercial landlords: Deutsche Bank is considering return-to-office plans that would make it one of the most flexible employers among large international banks.

Under the proposal, employees would be able to work from home up to three days a week, Bloomberg News reported. The bank is also “moving to provide our employees some additional flexibility in hybrid working models,” Chief Financial Officer James von Moltke told Bloomberg Television Wednesday.

Though location-specific plans have yet to be made, they will likely have an impact on Deutsche Bank’s real estate assets. The lender said in its quarterly report Wednesday that it expects “further savings” from the accelerated “rationalization of its real estate portfolio.”
 

David Goldsmith

All Powerful Moderator
Staff member

Quantum Shift Looms for Office​

What will the market look like on the other side of the pandemic?
The typical question about a recovery is how long it will take for a property sector to return to its previous status. In the case of the office market, whatever comes out on the other side of the pandemic hangover will almost certainly be substantially different from prior conditions.

Office properties have taken quite a hit from COVID-19, even though the measurable cost has been obscured by the long-term nature of office leases. As of April, the U.S. office vacancy rate climbed to 15.9 percent, up 280 basis points year-over-year, while sublease space has more than doubled during that time, according to Yardi Matrix.
That bump, however, is just the tip of the spear. Only about a quarter of downtown office workers nationally reported to an office last month, with the percentage closer to 15 percent in New York City and San Francisco, according to security firm Kastle Systems. The growth of work-from-home has made going to an office optional for many firms. The question is not whether office tenants will reduce their footprints, but by how much.
The Centers for Disease Control’s new guidance that fully vaccinated individuals no longer need to wear masks in most indoor situations added another potential twist to the issue of returning to the office. Though that announcement appears to open the door wider, a host of other issues are in play.
Demand for space merely scratches the surface of the considerations facing owners and occupiers. The industry must come to grips with a host of factors, including when workers can safely return; how many people will use offices and how often they need to be there; where offices should be located; how offices interact with lifestyle preferences, such as commuting and walkability; how to re-design space to attract and maintain talent while meeting functional needs; and how to accomplish all this while dealing with mandates to improve energy efficiency and cut greenhouse gas emissions.
The industry is facing a “quantum fundamental shift,” said Jeff Adler, vice president of Yardi Matrix, during a Yardi-sponsored webinar last week. “The sector is at the beginning of a wrenching multi-year rethinking of the nature of work,” he observed. “Everything is in play.”

WHERE TO WORK?​


The percentage of workers reporting to an office is expected to triple to 75 percent by year’s end, said Benjamin Breslau, chief research officer at JLL, speaking last week on a panel at the Urban Land Institute’s virtual spring conference. He predicted work-from-home will double from pre-pandemic levels to 20 percent of workers. Daniel Ismael, a senior analyst at Green Street Advisors, said at another ULI panel that the average worker’s weekly time in the office will likely drop from 4.5 days before the pandemic to 3.5 days.
Many companies have found that workers can be productive from home, but to what extent can it be done without impacting corporate culture and collaboration? And to what extent does it affect the ability to retain workers and keep them happy? “Every tenant is asking the same questions about how and when to get back,” Breslau said.
A consensus has formed around the idea that most companies will adopt more flexible arrangements, but what that means for demand depends on the details. In terms of how much space is needed, there is a big difference between giving employees a choice to be fully remote and requiring them to be in an office part-time.
The primary question hanging over the industry is how office utilization will change after the pandemic ends. Decisions are complicated not just by employee preference but by the nature of the job and the industry. Some types of knowledge work (such as programming) can be performed well anywhere, but others benefit significantly from a collaborative environment. “Companies in the same industries will have a wide divergence,” Ismael said.
While a part of the office space decision will be driven by the type of jobs and corporate culture, companies will also have to consider another complex issue—employee preferences. If proximity to an office is no longer as important, how will that change workers’ preference for where they want to live? In the years leading up to the pandemic, the default assumption was that young knowledge workers wanted to live in an urban environment. Job growth over the last 20 years has been concentrated in urban areas, even in secondary and tertiary metros.
However, the pandemic prompted a drop in population in the urban submarkets of gateway metros. Young families moved to suburbs to get more space while others who were suddenly unmoored from the need to commute relocated to different parts of the country. Reducing the cost of housing was the main priority for some, but part of the trend was driven by the closure of entertainment and cultural venues that make cities appealing, particularly to young workers. When those attractions re-open, some former residents will return, but others have left permanently.
Occupants could adjust by shifting offices to the suburbs, moving to less expensive metros, or adopting a hub-and-spoke model with a city headquarters and suburban outposts. Mark Grinis, hospitality and construction leader at EY Global Real Estate, said at the ULI conference that a more distributed workforce is at odds with the need for collaboration. Studies conducted by EY found that secondary locations—the “spokes”—had the worst workplace productivity performance.
As a result, Grinis commented, companies must tailor workspaces to the particulars of their workforces. “If I invest time when I go to the office, I want the best experience out of that,” he said. Often central business district locations “are best able to take advantage of that.”

LIFESTYLE CHANGES​

COVID-19 has prompted many people to think about lifestyle and where they want to be. Many workers were relieved to avoid long commutes, but walkable neighborhoods with access to shopping and other amenities remain popular. Diane Hoskins, co-CEO at Gensler, observed that many workers are choosing smaller cities and inner-ring suburbs, especially in the technology sector.
Office towers in San Francisco’s Financial District. The city is among those expecting a significant addition of new product. Photo by Jason Barone on Unsplash
“There’s a real appetite for reconsidering how cities work,” Hoskins said. “When you look at real estate as an investment in people, you say how do you do it in a way that optimizes … competitiveness to be able to thrive in a global environment.”
One difficulty in picking a location is that few metros are configured to meet conflicting worker preferences. People want more space, but they also want to commute less and be close to shopping and other amenities. That presents challenges to employers looking for optimal locations.
Lifestyle considerations mean that office buildings must be re-thought to meet the new paradigms. For example, workers may demand less density for health reasons. If workers come to the office less frequently, then more collaborative space is likely needed to efficiently use the time they are present.
That means occupants may have to redesign space to add amenities to retain workers or entice them to come to the office. Myriad redesigns and even downsizing, are likely to require costly capital expenditures at a time when asking rents are flat or declining due to declining occupancy and competition from new stock. More than 160 million square feet of space is under construction, according to Yardi Matrix, with a large amount of deliveries expected in New York City; San Francisco; Austin, Texas; Charlotte, N.C.; Boston and other metros.
Yardi’s Adler noted that companies must be purposeful about office design rather than following the traditional model in which employees are in one spot by default. “Companies have to decide, ‘Why are we in the office, what do we want to accomplish?’” he said.
Creating amenity-rich space and leasing flexibility seems suited for growth in coworking, although the coworking industry was hard-hit by the pandemic; the core business model—leasing large blocks of space and re-leasing at higher rates to small tenants—proved unstable when offices were mostly closed. Coworking will increasingly take a new form, one in which office owners partner with service providers to create flex space that is leased short-term and to smaller tenants.

METAMORPHOSIS COMING

Transformation of the office market will take several years, as existing leases mature and companies discover what employees want and what kind of space changes prove successful. One thing seems clear: There will be no one-size-fits-all model. Some jobs can be done productively remotely, others require in-person collaboration at least part time. Workspace design solutions will vary widely by employee demographics and the requirements of each job.
However these issues shake out, office occupants will reduce space needs; the only unknown is how much. Some of the reduced demand will be made up by job growth, but that factor will be balanced out by the tremendous influx of new supply. The result will be thinner margins, an increase in distressed debt, and probably lower property values, at least in some markets. Office owners and tenants will have no choice but to take a hard look at how to adapt for the future.
The stakes are high for employers because office space decisions impact human capital. Green Street’s Ismael noted that firms on average spend five to 10 times more on employees than they do on renting space. That means improving worker productivity and reducing turnover have a bigger impact on profitability than reducing the office footprint. “You don’t want to risk dollars to save pennies,” he said.
 

David Goldsmith

All Powerful Moderator
Staff member

NYC metro area office occupancy on the rise, but still below 20%​

The sounds of spring are back in Bryant Park, with lawnmowers cutting the grass and even office workers gabbing over lunch in the sun.
However, the largest green space in Midtown, Manhattan, normally fills with office workers this time of year:

“Right now, it’s empty," said Phil Perry, who has worked in the area for decades. Perry who works in banking explained that in "years past, on a nice sunny day like this, you wouldn’t see a square inch of open lawn. It’d be blanket to blanket with people playing Hacky Sack, frisbee, the whole nine yards. Right now, I’d say you’re at 20% of what’s the norm.”

Perry says his office is at 50% capacity, with people alternating each week working from the office and at home.
“It’s more productive, being back in the office," he said.
That and vaccines, experts say, are driving up the return to offices and occupancy rates.
Kastle Systems, which manages security at 275 buildings in New York City, says its data shows office occupancy started dropping in March 2020. During the week of April 15, 2020, it hit the low of 4.3% of pre-coronavirus pandemic levels. It worked its way back to 10% in July and 16% in October.
The winter holidays dropped it back below 10%, but it climbed since then. As of Wednesday, it was back up to 17% of pre-pandemic levels.
Still, New York and San Fransisco are the two major cities in the country with the lowest occupancy rates. Nationwide, the average office occupancy is 27% of pre-pandemic levels.
“New York, when you look across major markets across the United States, has been amongst the very slowest to return to the office, which I think we can explain by how hard the pandemic hit New York at the beginning,” said Mark Ein, the chairman of Kastle Systems.

San Fransisco is the lowest, he says, because the large tech sector there was already prepared to go remote and can more easily embrace it than other industries.
Ein believes the numbers will increase as many working-age people are fully vaccinated after Memorial Day, and tick up steadily over the summer with a giant jump again Labor Day.
"We can see the light at the end of the tunnel," said Brian Soto, Time Equities Inc.’s Director of Acquisitions and Asset Management.
Soto agreed office workers will return in bulk in September to the roughly 1 million square feet of New York City commercial space Time Equities Inc. owns and manages, but says he expects a bump after the July 4th holiday as well.
“We’re seeing more deals happen. We’re seeing more tours happen,” Soto said. “My head of sales and leasing, she has said she has not seen this much activity since the spring of 2019, so we’re very encouraged.”
Workers like Perry know it’s just a matter of time before things start to fill up at Bryant Park and in their offices.
“Come two weeks from now, we’re going to a 60%, so 6 out of 10 days, and Labor Day is going to be 80%," Perry said.
Most NY1 spoke with agreed: there will now always be a component of working from home that didn’t exist before the pandemic.
But a psychologist we spoke with while he was taking his lunch in the park was focused on the positive:
“Just seeing people enjoy each other again... we’re in Bryant Park. It’s like, the grass is greener. I don’t know, it’s like the trees are just, like, smiling at you," Dr. Jairo Gonzalez said. "We're back and we'll thrive."
 

David Goldsmith

All Powerful Moderator
Staff member

Manhattan office availability keeps on climbing​

Net sublease availability declined for 2nd consecutive month​

It was another record month for Manhattan’s office market — but not in the way landlords are hoping for.
Manhattan’s office availability rate hit another all-time high of 17.1 percent in May, according to Colliers International’s monthly market snapshot.
Overall, 1.53 million square feet of office space was leased in May, up 8.2 percent from a year ago. The average asking rent last month was $73.26 per square foot, a decrease of 7.5 percent from the same time last year.

Still, leasing volume was slightly lower than the 2020 monthly average of 1.58 million square feet and less than a half of the 2019 monthly average of 3.58 million square feet. Monthly absorption was negative at 3 million square feet.

Supply outpaced demand partly because of millions of square feet of space that had been scheduled to come on the market even before the pandemic. That included 673,000 square feet of space at 295 Fifth Avenue and 459,000 square feet of space at 360 Park Avenue South, said Franklin Wallach, Colliers International’s senior managing director for New York research.

The largest lease signed in May was the U.S. Security and Exchange Commission’s 303,000-square-foot extension at 200 Vesey Street. The biggest new lease was signed by financial services company Fiserv, which took 94,000 square feet at 1 Broadway, followed by Anthem’s 72,700-square-foot lease at Penn 1.
On the bright side, net sublease availability decreased for the second consecutive month. Manhattan’s sublease inventory, which has increased by 75 percent since the onset of the pandemic, stood at 20.92 million square feet at the end of May. The sublease share in total availability in May was 22.8 percent, the lowest that’s been since July 2020.

The decline was partly attributed to companies that decided to reoccupy spaces that they had once marketed for subleasing, Wallach said. But he cautions that it’s too early to tell whether this is the beginning of the end of the sublease surge.
 

David Goldsmith

All Powerful Moderator
Staff member
The good news:
Employers project 62 percent of workers will come back to Manhattan offices in September, according to a survey from the Partnership for New York City. That’s up 47 percent from projections made in March.

The not so good news;
Most of these workers will only be coming back three days a week. And as of the end of May, 12 percent of Manhattan employees had returned to the workplace.

 

David Goldsmith

All Powerful Moderator
Staff member
Manhattan sublease scourge finally abates
Tenants pulling space off market as they plan to reoccupy offices

The surge of Manhattan sublease space appears to be tapering off.
With the city starting to reopen, tenants that put their office space up for sublease are beginning to take that space off the market in significant numbers, according to CBRE. New additions of such space are also beginning to slow.

It all points to signs that the record amount of sublease space — a drag on office rents — is starting to recede.

This year, tenants have withdrawn 2 million square feet of sublease space, with more than half that coming in April and May. Most companies making that move are doing so because they plan to bring workers back to the office.
New additions of sublease space also slowed to 800,000 square feet in May, the smallest figure since availability started shooting up in June of last year.
The Manhattan office market still has a long way to go, though, with sublease space accounting for 26 percent of available square footage at the start of June. If that proves to be the peak, it would be below the market high of 31 percent during the financial crisis of 2008 and 2009.

 

David Goldsmith

All Powerful Moderator
Staff member

Employers face uphill battle luring staff back to the office​

Fewer than 3 in 10 white-collar workers have returned to their desks across 10 major U.S. cities​

With more than half of all adults fully vaccinated, Americans are once again eating at their favorite restaurants, attending concerts and jumping on flights.

But the vast majority of workers have yet to return to the office.

As of this week, fewer than three in 10 white-collar employees, on average, are back in their offices in 10 major U.S. cities — including New York, Los Angeles and San Francisco — according to the Wall Street Journal, citing data from Kastle Systems.
 

David Goldsmith

All Powerful Moderator
Staff member

Lower Rents? Check. Speakeasy? Check. How Office Landlords Are Enticing Tenants.​

As New York City stirs to life, landlords are trying to hold on to their tenants by redesigning spaces to accommodate social distancing and Zoom calls - but also socializing.
 

David Goldsmith

All Powerful Moderator
Staff member

Office Vacancies Soar in New York, a Dire Sign for the City’s Recovery​

Nearly 19 percent of all office space in Manhattan has no tenants — the highest on record — as companies shed leases and embrace remote work.

 

David Goldsmith

All Powerful Moderator
Staff member

Manhattan lags Chicago, LA in returning to the office​

Real estate workplaces have been the most active during pandemic​


For all of Wall Street’s drum-beating to march workers back to their desks, Manhattan office buildings have actually been slower to refill than those in Los Angeles and Chicago.
The nation’s three largest office markets were emptied early last year by the coronavirus, but data show attendance varied wildly among those cities and their industries — and still does.
Pandemic lockdowns for all three cities started in the last full week of March 2020, but office use had already plunged the week before as companies proactively sent workers home, according to anonymized data gathered by Brivo, a firm that supplies card-swipe and other technology to 20 million users at 70,000 U.S. locations.
 
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