As some businesses succumb to the economic impact of the pandemic and others embrace remote work long term (Twitter being a prime example), the city’s commercial real estate market faces increasing uncertainty. The share of Manhattan office space available for lease has soared to 17.2 percent, up from 11.5 percent a year earlier and the greatest level in at least three decades, according a 2021 Q1 market report from Savills, the real estate advisement company.
The report notes that available office inventory in Manhattan totaled 464.9 million square feet in the first quarter of the year, compared with 452.7 million in the first quarter of 2020. Only 4.1 million square feet of space was leased during the quarter, down from 7.9 million a year ago. Asking rents also fell by 9.1 percent, and as in the residential market, landlords were offering more concessions to tenants, including an average of 17.4 percent more free rent for class A leases (those in the newest and recently refurbished properties).
Is a recovery on the horizon? A number of tech giants have increased their footprint in New York City during the year, including Facebook, Apple, Google and Amazon. And ideas for alternate uses have surfaced, among them: turning office space into residences, and a proposal for a Midtown casino. These ideas are by no means a solution, and only time will tell if prepandemic demand returns as vaccinations progress and a return to the office becomes viable.
This week’s chart, drawn for the Savills report, shows the share of available office space among Manhattan’s business centers.