After nearly four years since the initiation of pandemic-induced lockdown measures, New York City‘s journey towards a full return to office life remains a work in progress. Along this path, the city is approaching two significant milestones, one presenting a positive outlook while the other brings a more somber tone.
The first milestone involves office attendance rebounding to nearly 80 percent of its pre-pandemic levels. New York stands out as one of the top-performing markets in this regard, with workplace visitations in 2023 reaching 77.5 percent of the figures seen in 2019, as reported by Placer.ai. This marked a significant leap forward from the preceding year, witnessing a foot traffic surge of over 30 percent compared to 2022. (Placer.ai’s metrics gauge activity within a building, encompassing ground-floor retail spaces, rather than merely the presence of office workers at their desks.)
Despite this progress, as any office owner would attest, New York still has a considerable distance to traverse. However, the situation appears graver elsewhere across the country. In cities like San Francisco, Los Angeles, Dallas, and Washington D.C., office attendance figures for 2023 lingered at levels well below half of pre-pandemic norms. Only Miami has managed to surpass New York’s performance, with 78.1 percent of 2019’s office attendance levels. Despite frequent anticipations of a game-changing return-to-office wave, progress has been incremental. Optimism surged once more at the onset of the new year, fueled by headlines proclaiming that “90% of Companies Will Return to Office By the End of 2024.”
This narrative echoes previous predictions, such as those made by Resume Builder in late 2022, asserting that “9 in 10 companies will require employees to work from the office in 2023,” based on a survey of 1,000 major business leaders. However, the actual implementation of return-to-office policies has proven sluggish. Even among companies that have succeeded in recalling most of their employees to the office, the transition to a full five-day workweek onsite has been challenging. Nationwide, office attendance remains down by approximately 33 percent on Tuesdays, Wednesdays, and Thursdays, dropping by nearly 50 percent on Mondays and Fridays. Only a handful of firms adhering to strict return-to-office protocols continue to utilize office space at pre-pandemic levels.
Many have adopted a hybrid model, allowing for a reduction in their physical footprints. Consequently, despite the gradual progress of the return-to-office movement, office owners continue to face significant challenges. Manhattan’s availability rate reached a record high of 18.2 percent in February, as reported by Colliers, edging closer to another milestone: 100 million square feet of available office space.
Across the borough’s primary office districts, total office absorption plummeted by 1.43 million square feet, bringing the cumulative available office space to 98.05 million square feet. Thus, while forecasts may paint an increasingly optimistic picture of an imminent return to office normalcy, healthy skepticism remains warranted regarding the immediate prospects for improvement in New York’s office market.
Source: The Real Deal