Office Space Recovery In New York Is Looking Somber
Fitch Ratings anticipates New York City’s office space recovery from the ongoing pandemic to be subdued.
According to Fitch, this below average recovery could see a double-digit net cash flow decline from pre-pandemic levels.
The study’s grim scenario assumes that there will be a 15% dip in property-level net cash flow due to more people working from home, space reductions, and lower rent. Additionally, the migration of tenants could also impact recovery.
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“The pandemic underscored the expensive, often cramped living conditions for many (younger) workers, while also stressing revenues for key infrastructure and amenities, such as mass transit systems, entertainment, retail and restaurants.”
Quality will play a significant role in bringing tenants in, with Fitch predicting that modern Class A space will perform better than Class B offices. In fact, quality will be in such demand that Class B properties may have to update their space or convert it for other uses.
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