The year is coming to a close, and midtown Manhattan’s real estate market has yet to see any concrete signs of recovery.
For building owners, surrounding businesses and workers in tight quarters at home, it’s not an ideal position to be in.
However, the city is facing a conundrum: old office towers remain vacant, are too outdated to lure in any new tenants, but are also too new to be fully renovated and repurposed.
Despite many companies making their return to the office over the last several months, vacancy rates across some of the world’s largest cities continue to climb as flexible policies take precedence.
“There’s no part of the world that is untouched by the growth of hybrid working,” said Richard Barkham, global chief economist at CBRE.
Flexible work policies are not only the preferred mode of working for most professionals today, but companies also benefit from being able to cut back on their real estate expenses. But this could be treacherous for landlords.
According to a study from Columbia and New York Universities, the growth of remote work may even reduce tenant demand by 28% in the U.S., with 10% being in New York.
Unfortunately, empty buildings also mean surrounding businesses suffer. Because restaurants and similar street-level businesses rely on traffic from professionals, the dip in daily commutes has repercussions for more than just the real estate industry.