Although Manhattan’s office market is slowly starting to rebound, there are several factors that may threaten the industry’s future.
For one, remote working has become a mainstay for many companies, keeping occupancy in offices at a minimum. In fact, analysis from Kastle Systems shows that over half of offices in Midtown, Midtown South, and Downtown are still largely empty throughout the work week.
Still, this arrangement is not the only component impacting the city’s office industry. More and more, older properties that are not equipped with modern amenities are struggling to attract and retain occupants.
Demand for Class A office space that features high-end technology and forward-thinking design continues to grow, and buildings that lack these qualities are struggling to bring in new tenants.
However, the biggest threat to Manhattan’s office market is the 11.47 million square feet of new non-owner-occupied space expected to be available through 2024, according to Moody’s Analytics.
These numbers do not include planned properties that already have owners, however, and are subject to change throughout the year. A report from Colliers shows that Manhattan leasing activity was up 26% annually last January to over 2.28 million square feet.
Despite this, new demand may not be enough to offset the massive amount of available office space, which was at 17.2% in January.
Pair this with the shift to remote working and growing demand for coworking spaces, and the office market may never fully return to pre-pandemic levels.
