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Demand for office space continues to fall in New York City despite a pickup in leasing activity.
According to data from real estate software company VTS, office space demand fell by 23% in August, hitting its lowest rate since February of 2021.
Although office space demand fell nationwide during this same time, New York saw the largest dip, particularly in areas where the biggest employers come from the insurance, finance and real estate industries.
“A summer slowdown is typical for office demand, but what remains to be seen is if this downward trend will continue or if we’re simply settling into a new ‘post-pandemic normal’ for office demand levels,” said Nick Romito, CEO of VTS.
“Economic concerns, particularly around inflation and rising interest rates, have created a cloud of uncertainty that’s hanging over the office leasing market.”
On a more optimistic note, August marked the best month for office leasing in Manhattan since the beginning of the pandemic, with 3.4 million square feet of office space being leased.
Even more, demand for Class A office space has remained strong, with VTS’ Chief Strategy Officer Ryan Masiello stating that tenants are seeking quality rather than quantity in the aftermath of the pandemic.
