Cushman & Wakefield chair sees bright future for office in SF and NY

“The future is looking bright” for offices in San Francisco and New York.

That was the forecast by Cushman & Wakefield Global Brokerage Chairman Bruce Mosler in a segment of “The Big Money” on Fox Business, pointing to better days ahead for the empty offices on either coast.

He said this year started off with 5 million square feet of office demand in the first quarter, after another 5 million square feet of demand during the previous period.

“Two consecutive quarters of 5 million square feet is pretty good. It’s not at the 10-year-average, but it’s much better,” Mosler observed.

He said office landlords are seeing a rise in demand this year, not just from the tech sector, but broadly, including financial and legal. 

“San Francisco is coming back,” Mosler said. “We are seeing demand again. The bifurcation of the market there, mirrors what we see here” in New York. 

“Overall, we are seeing positive green shoots in terms of demand.”

Mosler said he sees some very big “commitments made” for offices, including “commitments talked about.” 

“Going forward, we feel pretty optimistic,” the chairman said during the four-minute, on-air interview.

Asked by a Fox host if empty commercial spaces could be turned into artificial intelligence data centers in a 20-year forecast, Mosler said “we all acknowledge that in the corporate sector we have some obsolescence.”

He pointed to New York, which has identified between 35 million and 40 million square feet that could be converted to different uses. 

“But by and large, we have to recognize that, when it comes to quality space — trophy, trophy A, new development — that’s the bifurcation of the market,” Mosler said. “But we’re seeing demand remain very high. The vacancy in those buildings is substantially less than the overall vacancy.”

He said office vacancy in Manhattan was between 23 and 24 percent — and has peaked. Not a lot of new developments will be completed in the next few years, so Cushman & Wakefield predicts the number of empty offices will come down.

San Francisco, by contrast, has an overall vacancy rate of 36.6 percent, but with a similar demand for trophy offices.

Most importantly, Mosler said, when you look at demand for premium offices, there’s positive absorption. Such offices are the future. He said we have to stop defining the market by overall vacancy.

“If you took the bottom 10 percent — where those buildings are more than 40 to 50 percent — out, you’d probably be around 17 percent (vacancy), in that range,” Mosler said, referring to New York.

He said public-private partnerships, in conjunction with the mayor’s office, capital and incentives for developers, can create a “very positive framework” for office-to-home conversions in gateway cities at large.

— Dana Bartholomew

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