REBNY Data Unveils Robust Office Occupancy, Nearing Pre-Pandemic Norms

REBNY Data Unveils Robust Office Occupancy, Nearing Pre-Pandemic Norms

  • Tuesday, 04 June 2024 13:25

Amidst the drumbeat of foreclosure fears and ominous forecasts, the Real Estate Board of New York (REBNY) offers a refreshing perspective on the state of the commercial property landscape, courtesy of its latest analysis of office building foot traffic. Contrary to prevailing narratives, Manhattan's office sector is witnessing a gradual resurgence as more businesses beckon their workforce back to traditional office settings.

The crisis haunting the office market is often simplistically attributed to the rise of remote work. However, the reality is more nuanced, with landlords grappling with formidable challenges such as soaring interest rates and diminishing demand as companies recalibrate their spatial needs. REBNY's assessment hinges on data from pre-pandemic 2019, revealing that office occupancy rates were not consistently at 100% due to various factors like remote work, business travel, and vacations.

According to REBNY's findings, Manhattan's office attendance climbed to 74% of 2019 levels in March and reached 75% in April, eclipsing the 70% mark observed in March 2023. Drawing from location data encompassing 350 prominent Manhattan buildings, Keith DeCoster, REBNY's director of market data and policy, underscores the resilience across different property classes. Even Class B and C buildings boasted a robust 72% visitation rate, while Class A-plus properties soared to 82% in March and surged to 89% in April.

Unsurprisingly, the crests of Manhattan's commercial prowess, typified by landmarks like One Vanderbilt, One Bryant Park, One World Trade Center, and various edifices in Hudson Yards, basked in near-full occupancy, registering up to 95% daily attendance.

Midtown Manhattan emerged as the epicenter of foot traffic with visitation rates hitting 76% and 78% in March and April, respectively. Meanwhile, Downtown experienced a commendable uptick from 54% in February to 66% in subsequent months, indicating a gradual rebound.

Zach Steinberg, REBNY's senior VP for policy, emphasizes the inclusive nature of attendance data, encompassing visitors to retail establishments housed within office buildings. This holistic approach sheds light on the broader ecosystem sustaining these properties.

In essence, REBNY's observations paint a picture of incremental recovery, propelled by the resilience of premier properties, while underscoring the multifaceted dynamics reshaping Manhattan's commercial real estate landscape.

While it may seem like including visitors to retail outlets within office buildings could distort office occupancy data, REBNY assures that their methodology remains consistent. Keith DeCoster, REBNY's director of market data and policy, clarifies, "No, because our data for 2019 also included visitors to stores and restaurants in office buildings, so we’re still comparing apples and apples.

This sentiment echoes findings from a recent survey conducted by the Partnership for New York City, an organization representing 130 major employers. According to their data collected between April 19 and May 6, office attendance stood at a commendable 72% of pre-pandemic levels. These figures debunk the prevailing narrative propagated by certain "barometers" suggesting that office occupancy has dwindled to half of its 2019 levels.

In conclusion, the latest insights from REBNY and the Partnership for New York City offer a reassuring outlook on Manhattan's office market. Despite ongoing challenges and debates surrounding remote work and commercial real estate dynamics, the data underscores a notable recovery trajectory. By adopting a holistic approach to analyzing office attendance and considering the broader ecosystem within office buildings, these findings provide a more accurate representation of the current landscape. As businesses gradually return to traditional office settings and foot traffic continues to climb, the narrative of doom and gloom surrounding office occupancy levels is increasingly challenged. These insights serve as a beacon of optimism, signaling resilience and adaptability within New York City's commercial real estate sector.