New York City's commercial real estate is still on shaky ground. A new report shows a record amount of office space available in Manhattan as remote working continues to dominate.
Citing a new report via investment management firm Colliers International, Bloomberg says office availability increased to 14.9% in January, the highest since the Dot Com bust (2000).
Leasing plunged by 47% over the month compared with the same period last year. Asking rents are on a waterfall trajectory, falling for the seventh consecutive month to $73.65 a square foot, the lowest in three years. Not even at these prices are companies willing to set up shop or expand office space in the borough.
Supply is another issue. Since the pandemic began, companies based out of densely packed skyscrapers shifted employees to home and have made some of those working environments permanent. This has led to companies reducing their overall corporate footprint.
While the borough's overall commercial real estate conditions have a negative outlook, there were some signs of optimism. "Leasing in Manhattan reached 1.9 million square feet (about 176,500 square meters) in January, the highest level since July, and 20% higher than the 2020 monthly average," said Bloomberg.
One notable large lease was Beam Suntory, an American company named Suntory Beverage & Food Ltd, leasing a 100,000 square feet space at 11 Madison Ave.
As we noted last month, the return of office workers to the financial district has been nothing short of a disappointment as foot traffic slumps, yet again.
The low rate of office workers returning to Manhattan mixed with a record amount of office space available doesn't bode well for the borough's recovery. As a whole, the city will lag the rest of the country by a couple of years in terms of an economic recovery.