A new report shows that the value of New York City’s office market has fallen by $28.6 billion and $850 million in property taxes for the 2022 fiscal year.
The report from New York’s Comptroller Thomas DiNapoli presents a grim look at the near future of the office market.
These losses represent the first dip in total office property market values in two decades.
“When the pandemic hit, companies shifted office workers to remote work, rents fell and vacancies rose,” said DiNapoli. “I am optimistic for the sector’s recovery, but its short-term future remains uncertain as employers assess future use of the space. The city should closely monitor trends in the sector and consider the future impact on tax revenues.”
Additionally, the comptroller’s office is anticipating that the value of office buildings won’t bounce back until 2025 and it may be years before the market fully realizes how the pandemic has impacted the real estate sector.
As a result of the pivot to remote work, Jonathan Miller, president of real estate appraiser and consultant firm Miller Samuel, believes that the overall cost of office and retail space may decrease over the next few years.
In fact, the Real Estate Board of New York cited that lower office occupancy led 30% of storefronts to be vacant in the Grand Central Terminal area and Midtown East last summer, which is double the average rate.