By Hadassa Kalatizadeh
Manhattan’s supply of vacant sublease office space has hit a 20-year peak and it is expected to continue rising, as per Cushman & Wakefield. At the end of October, Manhattan had 16.9 million square feet of office space available on the market. This beats the previous record of 16.8 million square feet, which was set in May 2002 in the aftermath of 9/11 and the bursting of the dot-com bubble.
As reported by Crain’s NY, the record in vacancies can be blamed on the Coronavirus pandemic. Many businesses still have their employees working from home, making subleased office space in the Big Apple more undesirable than it has been for the last two decades. “If corporations don’t know what their current growth plans are going to be in the city, it’s easier to just put that space on the sublease market today and reevaluate it as we get out of the Covid era,” said Rich Persichetti, Cushman’s director of tristate research.
Inventory of subleased space was even high prior to the pandemic, reaching 11.5 million square feet in March. Persichetti said he thinks we can start to see more demand for Manhattan office space when a vaccine is made available to the public, but he expects sublease vacancies to continue their rise for the immediate short term. “I would say we’re going to get at least close to 20 million square feet,” he said. “There are enough additional spaces that we’re tracking that could get us close to 20 million.”
When the pandemic-led lockdown was set into action in mid-March, few could predict that it would spur such long lasting ramifications. Even in the summer, most believed that most people would be back at their office desks by Labor Day. However, a recent study from the Partnership for New York City, revealed that only a mere 15 percent of employees expects to be back in their offices by the end of 2020. In fact, a report from Kastle Systems International reported that from all across the country, New Yorkers have been the most reluctant to return to their offices.
As per a recent article in Crain’s, demand for Manhattan office space is down by about 60%, according to Cushman’s figures. “There’s limited activity,” Persichetti said. “We have seen a few subleases signed but not enough to make a dent in the numbers.” For the time being, this demand is not expected to improve as Covid-19 infection rates are rising again across NYC as the winter months approach.
