NYC Offices Are Ghost Towns

I just got back to Miami Beach from NYC. The streets, the restaurants, the theaters. the cabarets houses, the museums, the art galleries, and the event venues are all filled with people. The city is totally vibrant. The only place where ghosts are dancing 24/7 are in the thousands of offices that are still empty, and probably will be for a long time. I just can’t imagine what it’s like having to pay for office space that is not being used. It used to cost us over $25,000 a month in rent for our PR agency.

We did that for 25 years. I get the heebie-jeebies when I think about the money we had to generate just to cover our overhead. For many companies that amount of money is small change compared to what they have to spend to keep their office lights on. Look at the space ship building Apple built. It was the dream office building Steve Jobs always wanted. Now it’s practically an empty shell.

As time goes on, more and more folks will return to the office just to get out of their homes. However, it took Covid-19 to make us all aware of the joys of working remotely. This is a concept that many of us will worship forever

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WATCH LIVEWEALTH

Only 28% of New York office workers are back in the office 

  • Only 28% of Manhattan office workers are back at their desks and fewer than half will be back by January, according to a new survey.
  • Employers expect that 49% of office workers will return on an average weekday by January, according to a survey of 188 big employers in Manhattan by the Partnership for New York City. 
  • More than a third of employers expect their office space needs in Manhattan will decline over the next five years, according to the poll. 
  • Continued weakness in the office sector could prove costly for New York City’s budget, as it means a loss in property taxes.

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According to the survey, more than a third of employers expect their office space needs in Manhattan will decline over the next five years, and 13% expect a reduction in their New York City workforce.

“Post-pandemic, remote work is here to stay,” said Kathryn Wylde, president and CEO of the Partnership for New York City, the city’s leading business group. “There is going to be a permanent relook at keeping offices and jobs in New York City.”

Office vacancy rates in New York City are now at a 30-year high of 18.6%. The value of the city’s commercial real estate has fallen by $28.6 billion, or 16.6%, reducing property tax revenue by up to $1.7 billion this fiscal year, according to a recent report from New York State Comptroller Thomas DiNapoli. Property taxes are the largest source of revenue for New York City, and commercial property is the largest source of property taxes, so continued weakness in the office sector could prove costly for the city’s budget.

While commercial real estate landlords and developers say leasing activity is strong and workers will return to the office, many employers say the city’s high taxes, long commutes and high costs could prolong any recovery in the commercial sector.

By January, only 13% of Manhattan office workers are expected to be in the workplace five days per week, according to the survey. A third will be in three days per week, 15% will be in two days per week, 7% will be in one day per week and 21% will still be fully remote.

The industry with the highest expected average daily attendance in January will be real estate (80%) followed by law firms (61%) and financial services (47%). The industries with the lowest expected attendance in January will be accounting (36%), consulting (30%) and tech (24%).

Wylde said that in addition to workers staying remote, the city is grappling with high-earning business owners and financial partners leaving New York for tax reasons and taking their companies and workforce with them.

“The danger is that when the high earners leave, they take operations with them,” Wylde said. “So we hear now of operations in asset management and other areas, not just individual high earners, but the real business operations moving to Texas, to Tennessee, to Florida.”

Wylde said 22% of financial firms plan to reduce their New York City-based workforce in the next five years — an alarming number, given that financial-services are the economic backbone of New York City.

“What’s going to happen over the next 5 to 10 years in terms of our economic and tax dependence on a population that now knows its highly mobile,” she said.

1 thought on “NYC Offices Are Ghost Towns

  1. It’s interesting to read what is happening in NYC. A family member has an office in the center of NYC providing physical therapy so they continue there with all their equipment. I hope their rent has gone down, or would it go up with owners trying to make up for rent lost with vacant offices?

    I think we’re far from over dealing with Covid and variant(s?), so staying out of offices may continue. Family in Virginia and Michigan are enjoying working at home, though one had been doing that long before the pandemic. If I was still working, I might be exploring providing teletherapy though not all we provided was amenable to that and not in hospitals. Our profession had begun that before the pandemic too, on a limited basis to remote locations, but the pandemic expanded the possibilities.

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