The office from which I write this column is almost empty. The same goes for the offices of many different companies – banks, law firms, media – which I can see from the Midtown windows of the New York Post.
But does this portend a dystopian future of deserted office towers, accompanied by a collapse of the tax base largely dependent on the economic weight of these towers?
No, despite panic over a report showing companies are offering more jobs to the work-from-home crowd than ever before.
“It’s only going to get worse,” warned Kathryn Wylde, CEO of Partnership for New York City, of the findings from research firm Emsi Burning Glass. It’s “a big cultural shift, and I don’t see it reversing.”
But we are all prisoners of the pandemic moment, as we are of every moment. When the New Orleans Saints shut out the Tampa Bay Buccaneers on Dec. 19, NFL sages said with confidence that the lowly Saints were headed for the playoffs and Tom Brady and the Bucs were cooked.
It’s time to look beyond the end-of-day predictions and focus on a counter-intuitive truth. Despite space reductions of some 7.4% since March 2020 – peanuts compared to predictions of up to 25% – the Big Apple companies that use the most office space are taking not less but Following of it, as I will list below.
The phenomenon raises obvious questions: Are the people who run these companies all stupid? Don’t they read interviews with WFH-loving executives in the suburbs who say when asked by reporters, “I don’t care if I never have to see the LIRR/LIE/New Jersey Turnpike/Metro again -North”?
The Post exclusively reported the chilling investigation on Monday. It showed that among job openings from big companies in December, work-from-home positions jumped to 10.6% of all openings, or 25,800 out of a total of 243,000.
That’s a near-quadrupling of the 4% remote job openings from the start of 2020.
Never mind that 10.6% hardly sounds like a drastic change when some other “experts” predict that up to 75% of employees will work from home in the future. Data like this, along with other statistical and anecdotal reports, suggests to some that the city’s office market — the commercial bulwark that generates more tax revenue than Wall Street — is on the brink of collapse.
But as Charlie Chan used to say, “Contradiction, please.” The opposing view ignores some companies’ repeated postponements of back-to-office dates.
Despite all the pessimism, big corporations continue to renew huge leases — like the law firm Fried Frank at One New York Plaza in downtown and Madison Square Garden Entertainment at 2 Penn Plaza in Midtown. The two have re-signed for over 400,000 square feet each.
Newest Manhattan leases of at least 100,000 square feet signed in 2021 included outfits of all kinds: insurance giant Chubb Group at 550 Madison Ave., Turner Construction at The Spiral, law firm Venable at OneFiveFive, pharmaceutical software developer Schrödinger at 1540 Broadway and liquor maker Suntory at 11 Madison Ave.
In the past two weeks alone, streaming TV hardware pioneer Roku has signed on for a quarter of a million square feet at Five Times Square. This triples its New York space. Wait – isn’t Roku the kind of company, with its young, tech-savvy workforce, that you’d expect to send everyone home?
A few days later, Touro College and University took over 240,000 square feet in Three Times Square. So much for the idea that entire obsolete office towers could be ‘converted’ for educational purposes – in this case, a real educational institution is paying high rent in the office market to be in one that is anything but obsolete .
Some of the new leases have been signed at rents above $100 a square foot, the long-standing benchmark for the fanciest tenants in the fanciest buildings.
Meanwhile, overall Manhattan office leasing jumped 8.3% in the fourth quarter, undeterred by Omicron. There’s still plenty of space available and rents are lower overall, but that doesn’t add up to a sinking ship.
Other major deals could be announced soon, including for IBM and investment firm Franklin Templeton at One Madison Ave.
Another barometer of confidence lies in the construction of sales. Not only did the city’s so-called investment sale market return to pre-pandemic levels in 2021, but Manhattan’s office towers dominated it with 14 sales totaling $3.55 billion, more than half of the market which includes residential and industrial properties.
Of course, the total value of buildings in Manhattan is falling – how could it be otherwise in the current climate? – but no owner has yet been observed jumping from their roof.
The resilience model could change, of course. Much will depend on how effectively Mayor Eric Adams can tame crime and homelessness, especially in the subways and at Penn Station. An unexpected new virus strain on the heels of Omicron’s setback could further delay plans to return to the office.
But assuming there are no further disasters, the city and Manhattan in particular will regain its appeal for the best and brightest careerists – and the horizon won’t darken any time soon.