COVID Has Changed Manhattan’s Office Market Forever, Experts Say
Perhaps because of this, rental business in Manhattan recovered after a long period of drought with 2.4 million square feet leased in July, the third consecutive month of increased commercial leases, according to a brokerage report. Necklaces.
The news is not all rosy. Investment sales activity was 35% below the monthly average before the pandemic in 2019 and a record 17.1% of office space is currently on the market, according to the report. But, for brokers and owners alike, it also represents a rare and valuable opportunity for businesses to claim a stake along some of the most coveted trade corridors on the planet.
These were the main themes that emerged at the Commercial Observer forum, “State of the Leasing Market: Adapting to a Fluid Market,” on October 6.
Durst organization President Douglas durst said that “those who bet against the city will lose,” although he acknowledged that the city’s commercial market still has a long way to go.
“I think the market has the same elasticity and ultimate resilience as the sectors that have rebounded more clearly,” said Durst. “The trajectory of the commercial office market at the start of the summer was extremely positive, but the delta variant caused many tenants to delay their return. Yet we have seen a steady increase in office occupancy rates this fall.
Landowners have been busy modernizing their assets and adding health conscious equipment that are almost a requirement in today’s market. This not only means providing enough outdoor space to provide fresh air and circulation, but a floor plan that also boosts camaraderie and productivity.
“It’s not just about physically having an outdoor space or a new lobby, it’s about bringing people back to a sense of excitement and community so they can say to their employees, ‘We have chose the XYZ building for the following reasons »» David falk, Newmark, said the president of the tri-state.
But office workers have been productive working remotely, whether from home or in more remote locations. Now that workers have spent the past 18 months using Zoom, they’re looking for compelling reasons from their bosses why they should come back, say brokers and builders.
“What they’re looking for are points of interaction that really take them from a basic level of ‘We’ve done our job’ to ‘We’re a driving force behind the business’,” said Colleen Wenke, President and Chief Operating Officer of Taconic Partners. “Whether sitting outside in a stylish conference room [space] on a patio, whether in collaborative spaces where you can interact and generate great ideas – those personal and human touches that catapult a business to the next level.
The outdoor terraces are part of the high-end equipment. Durst did not have any in its commercial portfolio in 2014. Since then, the real estate company has converted setbacks and unused roofs into usable terraces, so more than 35% of its rental space in Midtown now contains them, Durst Principal David Neil noted.
New building technologies that emphasize communication and connectivity are also important selling points. Marc Rosenthal, chief operating officer of QO, a commercial real estate technology company, is considering mobile apps that connect tenants to their building’s amenities while also allowing developers to quickly communicate with office workers in the event of a COVID outbreak on a floor.
“The most important technology right now with tenants returning to the workforce is, ‘Am I going to be safe? Am I going to be healthy? ‘ ”Rosenthal said. “But it really comes down to the optionality of these amenities that landlords provide in the connectivity and the engagement that the tenant gets so they can build that community.”
Then again, New Yorkers might get bored spending all hours of the day with loved ones and pets, and might want to work in more spacious digs. Newmark’s Falk said a hedge fund trader told him he really didn’t want to go back to the office, until he got to work and saw that his desk had two giant new Samsung monitors in it.
“It’s the little things too, it’s not just that the lobby meets the purpose and brand of this company,” said Falk. “The little things actually make a big difference because these people used to say, ‘I’m going to work well at home,’ and now they’re like, ‘Oh, my god, look at these monitors. “”
The Commercial Observer rental forum also included Fried Franc‘s Jonathan Mechanic and Jennifer yashar; HqO Charlie Stephens; Brian klansky of See Inc.; Kramer levin‘s Jay Neveloff; George Comfort & Son‘ Peter Duncan; Brookfield Properties‘ Callie Haines; Bruce mosler of Cushman and Wakefield; David Goldstein of Savills; Himmel + Meringoff Properties‘ Leslie Himmel; Columbia Real Estate Trust‘s Nelson Mills; Nuveen‘s Nadir settles down; Durst Tom bow; Avison Young‘s Mitti Liebersohn; Place.ai‘s Stefan Martinovic; Alexis Michel of Hines; and Commercial Observer Robyn reiss and Max gross.
For more information on upcoming Trade Watchers events, click here.