Employers were quick to shift their staff to remote work when the coronavirus started to take hold over the nation. This was extremely true in New York City which was the epicenter of the pandemic. However, more than a year later, the vacancy rate is still sitting at a high 19%. This is the highest level on record since 1994. It’s also much higher than the 11.3% vacancy rate recorded over a year ago. It is also higher than the 16.4% recorded earlier in April.
So, what does this mean for New York City real estate in the long-term?
Companies Have Embraced Remote Work
As office space vacancies in NYC reach a 50 year high the companies across the city have embraced remote work. Kathryn Wylde, president of the Partnership for New York City said this was the biggest real estate crisis since the 1970s. This was when half of the city’s Fortune 500 companies with a physical presence in the city moved out.
“This is as close as we’ve come to that type of scenario where there’s an exodus from the city, and the recovery took 50 years…The city has to attract people for reasons other than going to the office.”
Things Could Get Much Worse
There are signs that things could worsen for the office space real estate market. One-third of the leases in New York City could expire over the next 3 years. The overall availability rate is the highest that it’s been since the mid-1970s.
According to the senior managing director for research at Colliers, Franklin Wallach, available office space will increase. Several companies are completing relocation plans which were announced before the pandemic. Also, new construction is being completed as well.