By: Benyamin Davidsons
As the pandemic seems to have waned, real estate experts are now looking forward to a strong rebound. COVID-19 led a difficult year for the industry, with stalled investments, historic office vacancies and lease renegotiations, low residential rent collections and retails stores shuttering.
Now real estate experts are hopeful that there’s no way to go but up. “The operative word is ‘optimism,’ ” said James Whelan, president of the Real Estate Board of New York (REBNY). “There is a real sense that things are heading in the right direction.” The REBNY just released its overall real estate broker confidence index, highlighting that optimism. For Q1 of 2021, the index was at 6.66 out of 10, which is a 53% increase in confidence compared to the end of December. “The panic has disappeared,” said Ira Schuman, a vice chairman with tenant-rep brokerage Savills.
Commercial brokers have their work cut out for them. As reported by the NY Post, countless big businesses emptied out their spaces, as employees worked from home, while at the same time new Class A buildings were introduced, added more space to the overall inventory. In May, Colliers commercial real estate brokerage reported that office availability in Manhattan reached a new record-high of 17.1% and since March of 2020, availability has increased by an astounding 70.2% to 91.64 million square feet. So even though in May, office leasing jumped by 56.1% compared to April, or 8.2% compared to the same period last year, there is still an abundance of available space.
As per the Post, overall, average asking commercial rents are down 7%, year-over-year as of May, at $76 per foot. “We adjusted our pricing and continue to move forward,” said Gregg Schenker, president of ABS Partners. “The fact that New York will become a less expensive city is very good for New York.” It presents an opportunity for “value shoppers”, said Colliers’ tristate president Michael Cohen. “What’s selling are opportunistic deals,” said Adelaide Polsinelli, vice chairman of Compass. “[They] are buying at the lowest point in a 10-year cycle.”
Owners and sellers will need to add innovation to woo tenants and beat out the competition though. Tenants are looking for Class A office space in new developments like Hudson Yards, One Vanderbilt and the World Trade Center, said Jimmy Kuhn, president of Newmark. Firms are now looking for open plan office spaces with upgraded amenities, high ceilings and outdoor space, said Peter Riguardi, chairman of JLL. “This is the model of the future. It will attract people back to the office,” he said.