The impact of the pandemic on the New York City office market remains relentless, according to figures from the state inspector.
The market value of office buildings in the city fell by $ 28.6 billion – 16.6 percent – over the past fiscal year, according to the report by State Comptroller Thomas DiNapoli. This is the first drop since at least 2000.
In the previous fiscal year, the total market value of office properties in the city reached $ 172 billion.
Other indicators from the second quarter tell the story of the paralyzing effect of the pandemic on the office market. Inquiry for rent averaged $ 70.26, below the average of $ 72 seen each of the last five years. The Office of Vacancies reached a 30-year high of 18.6 percent, slightly exceeding 15.2 percent by the end of 2020.
Among the city’s three major business districts, Midtown South shows the least possible resilience. The average praying rent has fallen more than 10 percent since the first quarter of 2020, while unemployment has risen by 9 percent. In Midtown and Downtown, rents fall between 3 and 4 percent, while unemployment has risen between 6 and 7 percent.
The city is losing about $ 1.7 billion in property tax revenue over the current fiscal year, more than half of which is driven by the loss in office building values.
Some of the city’s most expensive properties have taken massive hits in the wake of the pandemic. The World Trade Center’s market value has fallen 23.1 percent during the pandemic, according to the inspector’s report, and other buildings stand to lose at least 10 percent of the market value, including the GM building, the Bank of America Tower and the Solow building.
Amid uncertainty over the city’s office market future, recent weeks have sparked hope.
In the third quarter, Manhattan’s office market experienced a turning point when demand finally exceeded supply, The right deal previously reported. Colliers International’s quarterly market report said leasing volumes rose to 7.23 million square feet from July to September, up 58.8 percent from the second quarter. Quarterly net absorption was positive at 0.87 million square feet.
Google broke a pandemic record last month with its purchase of St. John’s Terminal at Hudson Square for $ 2.1 billion. Sales were the largest of an office building in the United States since the pandemic began.
In a report released late last month, Cushman & Wakefield predicted a migration back to the office that began in the first quarter of 2022. The study cited vaccine mandates and leveling Delta variant infections in the coming months as encouraging indicators for back-to-back office deadlines finally happen.
“Most companies hope to get back to you as soon as possible,” said David Smith, a co-author of Cushman’s study TRD‘s Akiko Matsuda. “Based on increasing tour activity, we know demand is there — so it’s not a question of whether office buildings will be repopulated, but when.”