Nearly 19 percent of office space in New York City is remain completely empty despite coronavirus restrictions being lifted more than two weeks ago and easing have started months earlier.
Although many companies have either called or are preparing to request workers to return to their offices, the amount of space available to be leased to firms is at an all time high.
The figure illustrates how remote work has quickly become the norm for many who would-be office workers. This is sending the city’s commercial real estate industry into turmoil.
But this has not been the case for the residential real estate market. In Manhattan, the median real estate apartment price hit $999,000 — an all time high.
When it comes to office space, before the pandemic, some 1.6 million people would commute into the city every day. Their presence helping to keep other businesses afloat with everything from shop and restaurants to theaters feeding off the back.
The amount of available space has only increased since the end of 2020 when 15 percent was available to be leased. That number has since jumped to 18.7 percent according to Newmark, a real estate services company.
In Downtown Manhattan, the number is even higher with 21 percent of offices without tenants.
With more employers allowing their workers to remote work for at least a portion of the working week, companies are now recalculating the amount of space they need and looking to either reduce their square footage in a bid to save costs.
Many New York employers are offering greater flexibility to their work force, allowing at least some remote work even as the pandemic recedes and recalculating their space needs.
The situation is unlikely to resolve in the short term with a third of leases in large Manhattan buildings set to expire in the next three years according to CBRE with many indicating they won’t need as much space when the time comes to renew.
The amount of available space is also set to increase as new construction projects which were started pre-pandemic, add a further 14 million square feet of office space.
The situation seems to be the same across major US cities. Some 24.1 percent of offices in Los Angeles are without tenants with a 21.9 percent vacancy rate in Chicago, but both cities already had high rates before the pandemic begun at 18.1 percent and 15.5 percent rate respectively.
Some big tech companies such as Spotify, Facebook, Microsoft, Twitter, Salesforce and Amazon are extending their work-from home policies, some permanently.