With some companies succumbing to the economic impact of the pandemic and others turning to long-term remote working (Twitter is a prime example), the city's commercial real estate market is facing increasing uncertainty. According to a market report by real estate consultancy Savills from the first quarter of 2021, the proportion of office space available for rent in Manhattan rose to 17.2 percent compared to 11.5 percent in the previous year and to the highest level in at least three decades.
The report finds that Manhattan available office inventory totaled 464.9 million square feet for the first quarter of the year, compared to 452.7 million in the first quarter of 2020. Only 4.1 million square feet of space were rented during the quarter compared to 7.9 million a year ago. Asking rents also fell 9.1 percent, and as with the residential market, landlords offered tenants more concessions, including an average of 17.4 percent more free rent on Class A leases (those in the newest and most recently renovated properties).
Is there a recovery on the horizon? A number of tech giants, including Facebook, Apple, Google, and Amazon, expanded their presence in New York City during the year. And ideas for alternative uses have surfaced, including: converting office space into residential buildings and a proposal for a midtown casino. These ideas are by no means a solution, and only time will tell if as the vaccination progresses the preandemic demand will return and a return to the office will be possible.
This week's graph, produced for the Savills report, shows the percentage of available office space in Manhattan business centers.