NYC Office Leasing Report Q1 2022
NYC Office Leasing Report Q1 2022
NYC Office Leasing Report Q1 2022. With the waning of the Covid-19 pandemic many companies are encouraging their employees to return to the office. But NYC office occupancy still remains stubbornly low. According to Kastle Systems, as of March 30th, NYC office occupancy was still only 36.9%.
A Partnership for New York City poll conducted between February 17- March 11, 2022, found that “concern about public safety, especially in the transit system, is the single biggest obstacle to mobilizing the return to work in the city’s office buildings.”
Furthermore, the work-from-home model is preferred by many employees and it has proven to be cost-effective and reasonably productive, although less so than working at an office. In keeping with this some corporations have now made full-time work-from-home or a hybrid schedule (both home and office), a part of their employment terms.
In what is considered to a blow to office landlords, JPMorgan Chase CEO Jamie Dimon acknowledged “It’s clear that working from home will become more permanent in American business.” JPMorgan Chase is the city’s largest commercial tenant. Read the full story here: Jamie Dimon to work-from-homers: You win
Costar’s Analysis of the NYC Office Leasing Market
Costar Group Inc. is NASDAQ: CSGP
CoStar is the world leader in commercial real estate information and has the most comprehensive database of real estate data throughout the US, Canada, UK, France, Germany, and Spain. Costar Group Inc. includes well- known brands like Loopnet, Emporis, Apartments.com, Home.com and BizBuySell.
Key Costar Manhattan Indicators:
- Available Asking Rent/SF: $54.85* ↓
- Vacancy Rate: 16.4% ↑
- Vacant SF: 71.3 M ↑
- Sublet SF: 22.5 M ↓
- Inventory SF: 436 M
- Existing Buildings: 1,620
- Under Construction: 9.6 M
*Weighted average across all Manhattan office buildings.
Office Leasing Activity in NYC
Even though office usage remains about a third of pre-pandemic levels, office leasing activity has increased for five consecutive quarters from Q3 2020 through Q4 2021. Some large new leases have come from tech-oriented and financial service companies that can afford new offices that remain partially occupied. Much of the other leasing activity are renewals where Tenants received favorable terms to sign extensions.
One Madison, 328,000 SF.
100 Park Avenue, 236,036 SF
320 Park Avenue, 221,976 SF.
437 Madison Avenue, 159,594 SF.
Cogent Realty Advisors’ Analysis of the NYC Office Market
♦ For the foreseeable future, office Tenants will have strong leverage when negotiating new leases and renewals.
♦ There will be fierce competition among Property Owners to secure new business and retain existing Tenants.
♦ New York City office buildings can be divided into two segments: Class A properties and “everything else”. Successful companies will take advantage of the current environment by leasing high quality office spaces in amenity-rich buildings at historically favorable terms.
♦ Class A and “in demand” properties will compete primarily by offering enhanced Tenant Incentives. These include lengthy rent concessions (the free rent period) and large cash contributions used for the construction of new offices. Modest rent discounts can be expected.
♦ Lower quality properties will compete by using hefty rent discounts.
♦ Pragmatic Landlords recognize that the office market has been disrupted and new business strategies are needed to motivate leasing. They include: (1) Upgrading building public areas; (2) Applying Covid-19 related health protocols including enhanced ventilation, air filtration, touchless entry and frequent cleaning; (3) Pre-building modern move-in ready office suites; (4) Offering flexible leases with shorter terms and opt-out clauses; (5) Delivering office space fully furnished with an internet connection; (6) Installing popular building amenities such as a conference center, quick service dining, and a fitness/wellness center; and (7) Providing a co-working facility as a service to existing Tenants and to attract new business.
♦ Office Tenants that are flexible with their lease term and space design can negotiate steep rent discounts with a Sublease. Read our recent report: Sublease Rewards and Sublease Risks.
Real Estate News
Adams: Remote work “draining” New York City’s economy
Barclays: Office Demand Could Drop By 20% Amid Hybrid Work
NYC’S Office Glut Hits Fresh High as Market Bifurcates Even More
YOUTUBE: How the COVID pandemic changed commercial real estate
Manhattan’s One World Trade Center Now 95% Leased After New Deal
799 Broadway Completes Construction in Greenwich Village, Manhattan
Googles New Manhattan Groundscaper Bets on the Furture of the Office
World’s Skinniest Skyscraper Now Towers Over Manhattan
About Cogent Realty Advisors, Inc.
Cogent Realty Advisors is an independent and licensed no fee Realtor with 20 years of experience representing businesses that lease NYC office space. We offer leasing solutions for office Tenants seeking stability and value in uncertain times. For information phone Mitchell Waldman at (212) 509-4049.
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