NYC skyscrapers empty as Manhattan reels with homework growth

Some of New York's largest skyscrapers are struggling to attract new tenants. Photo: Spencer Platt/Getty Images

Simon Mitchell's After the Covid pandemic, the office in Union Square in New York was eerily empty. Because four out of five tables are not in use in the 300-person space, the marketing manager only enters when he feels he might have company.

Union Square was once known for its bustling bars and restaurants, with office workers thronging to enjoy their fast-paced city life. Today, the area has experienced dramatic change.

Mr Mitchell, his partner, and their one-year-old child moved to Queens immediately after the pandemic. He's not going back to the office full-time.

«The rent is outrageous, and if you can avoid city food and have a flexible lifestyle, why would you want to go to the office anymore?» he says.

Even a cheap subway ride can't lure him or his colleagues back to the office, Mr Mitchell adds. «I wouldn't even take on a job that doesn't involve flexibility,» he says.

Former Headquarters Deutsche Bank at 60 Wall Street has been vacant since 2021. Photo: Sandra Baker/Alamy Stock Photo

Although New York City is starting to show signs of life, only about half of the employees who should be in the office have returned more than a year after the pandemic. The vacancy rate in office buildings in downtown New York has reached 22.7%, up 11.4% from pre-pandemic.

Meanwhile, the number of workers returning to the office has stabilized at about 60%, according to the New York Real Estate Board. The advisory group has warned of a coming wave of zombie buildings that are virtually non-functional due to low vacancy rates.

Some skyscrapers are already lifeless. The 47-story tower at 60 Wall Street has been vacant since 2021, when Deutsche Bank — its sole tenant — moved uptown to the edge of Central Park. The building's owners, the Singapore Sovereign Fund and the Paramount Group, have carried out costly renovations to attract new tenants.

Eric Adams, the city's mayor, urged workers to return to the office as the city grapples with the changing landscape. Last year, he said, «You can't run New York from home.»

But the desire for employee flexibility is greater than ever, says David Smith, head of global research for the Americas at Cushman & Amplifier; Wakefield New York. “And this demand is greater here than in any other part of the world,” he adds.

White-collar workers are fleeing New York in huge numbers to live without commuting, Mr. Smith, as well as being able to spend more time with their families and other personal matters.

«Especially people in their twenties and thirties who don't want to go back to the office full-time,» he adds.

The shortage of people returning to the office has hit the local economy: remote work is costing New York at around $4,661 (£3,750) per year per worker, according to Bloomberg, as employees spend less on food and entertainment at businesses close to the office.

Currently, about 22.7 million square meters are rented in New York. feet of space, and this figure is rising as companies seek to reduce the size of their offices.

Agents note that most of the companies renting space are in technology or media. industries. Spotify recently sublet 200,000 sq. feet at 4 World Trade Center, freeing up five floors. Facebook also announced that it is subletting approximately 250,000 sq. m of its 1.9 million sq. m in Hudson Yards.

New York Mayor Eric Adams urged workers to return to office. Photo: AP Photo/Hans Pennink

In response, the company was ordered back to the office. Blackrock, the world's largest asset management company, announced on Tuesday that staff must be on site at least four days a week.

In a memo, the bosses wrote: “Career growth occurs in moments of learning between team members and accelerates in moments of market movement, when we step forward and join the process. All of this requires us to be together in the office.

“We will move to at least four days a week in the office with the ability to work from home one day a week. This new approach goes into effect on September 11th.”

Other companies have introduced similar rules. JP Morgan recently ordered its senior bankers to return to the office for a full five days, adding that idlers would be punished for poor attendance.

At the time, the bank said: “As we have returned to a more familiar way of life and work, we can all appreciate the many benefits of face-to-face communication.

“We believe this is especially true when it comes to the importance of being in in the office — living together increases the speed of decision-making, as well as providing valuable opportunities for spontaneous learning and creativity, and allows our specialists to learn through our apprenticeship model.

Surprisingly, New York City's most iconic buildings are no longer the most attractive to large companies, says Andrew Lim, director of research at JLL in New York.

LinkedIn's headquarters in the Empire State Building has been leased for another five years. The agents suggested that after the lease expires, the company will seek to reduce the area it occupies in order to move to more modern offices.

“These old buildings have characteristics that are not as popular today as houses. tenants who generally prefer new buildings with amenities, modern finishes and more personal layouts,” says Mr. Lim.

According to JLL, about 25 million square feet of office space in Manhattan alone was empty and on the market for over 24 months. Agents and investors believe that the next logical step would be to repurpose these buildings, with about six million square feet of office space being considered for conversion to residential or retail space, among other things.

On the mainland, according to Cushman & Washington DC is leading the way with a commitment to convert 40 offices into residential buildings. Wakefield. This trend is already spreading to the east coast, with at least four office buildings needing to be refurbished. If this continues, the empty skyscrapers of New York may turn into residential towers.