By Ilana Siyance
The pandemic has led to what may turn out to be the city’s worst commercial leasing crisis in history.
As reported by the NY Post, Manhattan has close to 8 million square feet of prime office space begging for occupants in “trophy” towers which were recently opened or are slated to open by the end of 2022. According to figures by the Post and CBRE, three buildings’ worth of the Big Apple’s most expensive floors are awaiting tenants. Office space availability in Manhattan is at 15 percent, up from 11 percent early last year. Astoundingly though, physical occupancy is at just 15 percent, with employees still working remotely due to the pandemic.
The upcoming flush of new office space will be asking over $100 per square foot for rent, and the new buildings boast state-of the-art amenities and technology. The biggest available chunk is1.4 million square feet available at Two Manhattan West, the 58-story superstructure in Midtown West which has a total of two million sf of office space developed by Brookfield.
Another 1.2 million sf is up for grabs at Tishman Speyer’s The Spiral in Hudson Yards, which offers a total of 2.85-million-square-foot of office space, and at which pharmaceutical Pfizer has signed an early commitment to take on 800,000 square feet. About 500,000 square feet is available at Related’s mega project at 50 Hudson Yards, after 75 percent of the tower was pre-leased, with illustrious tenants including BlackRock. Other large openings also exist at 550 Madison Ave, and 660 Fifth Ave., both of which are undergoing major redesigns, as well as older buildings which are undergoing top-to bottom renovations including Three and Five Times Square.
“People have been talking about the death of cities since the Black Death,” said Real Capital Analytics senior vice president Jim Costello. “At some point, demand comes back. But at the same pace? That’s the big unknown. If it takes longer, then maybe some developers don’t have the wherewithal to get through it.”
Online research and operating platform VTS, in its VODI (VTS Office Demand Index), revealed that “demand [is] still 74 percent down from pre-COVID-19 levels,” adding that the new buildings are faring better with tenants seeking updated technological, sustainability and environmental amenities. “Leasing demand in New York City has shifted towards Trophy and Class A office space and away from Class B properties post-COVID-19.”
