Daily Dirt: NYC’s office market sending mixed signals

Almost exactly four years after the earliest pandemic-era lockdown restrictions, New York City’s return-to-office movement is still a work in progress.

On the road to an office market recovery, the city is approaching a pair of milestones: one positive and the other negative. 

The first is office attendance rebounding to nearly 80 percent of its pre-pandemic number. 

New York is among the top-performing markets by that metric, with workplace visitations for 2023 at 77.5 percent of 2019, according to Placer.ai. It was also a big step forward from the previous year, as foot traffic jumped by over 30 percent compared to 2022. (Placer.ai measures activity in a building, including in ground-floor retail space, not how many office workers are at their desks.)

As any office owner will tell you, the city still has a long way to go, but things are much worse in the rest of the country. 

In San Francisco, office attendance for 2023 was less than half pre-pandemic numbers. Los Angeles wasn’t much better. Dallas and Washington D.C. were still about a third lower than in 2019. Only Miami has performed better than New York, with 78.1 percent of 2019 levels.

Progress has been incremental, despite frequent predictions that the game-changing return-to-office wave is just around the corner. The new year has brought another rush of optimism fueled by headlines claiming “90% of Companies Will Return to Office By the End of 2024.” 

If this sounds familiar, it should. Resume Builder, the company that ran that story, made similar claims in late 2022: “9 in 10 companies will require employees to work from office in 2023,” it wrote in response to a survey of 1,000 major business leaders. 

It’s not Resume Builder’s fault that those companies have failed to implement return-to-office policies. Getting butts back in seats has proved slow work. Even those companies that have gotten most of their employees back into the office have been unable or unwilling to do so five days a week. 

Nationwide office attendance is down about 33 percent compared to pre-pandemic levels on Tuesdays, Wednesdays, and Thursdays. Mondays and Fridays bring a drop of almost 50 percent. 

Only the strictest of return-to-office employers are using the same amount of office space that they were in 2019, while many have been able to slash their footprints with a hybrid model. 

The result: Even as the return-to-office movement has progressed, office owners aren’t feeling any relief. 

The availability rate in Manhattan hit a new record high in February at 18.2 percent, according to Colliers, bringing us to our other fast-approaching milestone: 100 million square feet of available office space. 

Total office absorption across the borough’s major office districts was negative 1.43 million square feet, bringing the total available office space to 98.05 million square feet. 

So, even as forecasts of the impending return-to-office become more rosy, there should be healthy skepticism that New York’s office market will get any better any time soon.

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What we’re thinking about: How many days a week are you going into the office? Send a note to david.westenhaver@therealdeal.com.

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Closing Time

Residential: The priciest residential sale on Friday was $7.5 million for a multifamily townhouse at 94 3rd Place in Carroll Gardens. 

Commercial: The most expensive commercial closing of the day was $6.7 million for a 117,000-square-foot apartment building at 1941-47 Lexington Avenue (150 E 121st St). 

New to the Market 

The priciest residential property to hit the market on Friday was $36 million for an 11,800-square-foot townhouse at 34-36 East 70th Street in Lenox Hill. Tal Alexander of Official has the listing. — Matthew Elo

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A thing we’ve learned: The West Village townhome at 75½ Bedford Street is famous for its narrow design. At just 9 feet 6 inches wide, it’s the slimmest home in the city. But that pales in comparison to Warsaw’s Keret House. The home is technically an art installation (though it has had tenants) because it fails to meet Poland’s building codes, and with good cause. The structure is less than 5 feet across at its widest point. 

Elsewhere in New York

— New York State’s private sector workforce has officially hit a new post-pandemic record, with 8.35 million jobs, Crain’s reports. That’s a jump of almost 2 million jobs since the state had a low of 6.4 million jobs in the early days of the pandemic. Meanwhile, the federal jobs report has continued to show growth, with 275,000 new jobs added. 

— Mayor Eric Adams announced a program to boost the development of workforce housing in and around the city. The city’s partners on the program — the Building and Construction Trades Council and Cirrus Workforce Housing Advisors — pledged more than $100 million to fund affordable housing projects for the city’s essential blue-collar workers.

— Just months after he was booted from Congress, George Santos is looking to get back in on the action. Santos announced his latest bid for a seat in the House of Representatives via X. This time, he will be seeking election in New York’s Congressional District 1, which includes much of the Hamptons and eastern Long Island. In the announcement, Santos claimed “left office arbitrarily,” leading to one of the platform’s more entertaining fact-checks: “Mr. Santos did not leave office ‘arbitrarily.’ He was expelled in a bipartisan vote while under indictment for ‘multiple fraudulent schemes.’”

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