New York city’s office market is undergoing a massive reset at the moment at the same time as the city’s residents try to recover from the shocking number of victims of COVID-19. With many people still too scared to venture outside for anything but food, there’s a growing awareness that work isn’t going to look like what it did just a couple months ago for a long time. Commercial Observers notes that all of this is bad news for developers of the many office projects that were underway when the pandemic hit.
Countless landlords were also ready to ink deals with tenants, only to find the old market certainties swept away. Even in perfect health conditions, the return to business as usual would have been slow, as it is, says Timothy King of SVN | CPEX, “People are going to be gun-shy. There’s going to be a reluctance of expand … This is going to scar people.” Commercial Observer notes that this is terrible news for projects like Manhattan West, Hudson Yards, the new structure rising above Grand Central and Terminal Stores in Chelsea.
“We will see companies — having gone through a very difficult quarter or two — be very, very financially prudent,” David Falk (Newmark Knight Frank) told Commercial Observer. “A lot of companies when we came out of [the previous financial crisis] spent the first year doing more renewals than they typically would.” He said that after the 2009 crisis, 40 percent of all office leases signed in New York were renewals.
History is likely to repeat itself this time as well, he predicts. Add to that the realization that many companies, or teams are able to work quite efficiently from home, or at least they could assuming there were no kids for most of the day. Twitter has made working in the office optional now for its staff, while Morgan Stanley says it’s drawing lessons from its experience with home office options.
