REBNY’s new return-to-office gauge projects bright vision for ‘trophy’ towers

There’s a new kid on the block to report on how many workers are actually back at their desks in Manhattan office buildings — and it paints a more nuanced and optimistic picture than either. The widely cited Kastle Systems Back-to-Work Barometer or participation in the New York City Return to Office survey.

The Real Estate Board of New York’s new analysis of location data, first reported here, relies on estimates from Placer.AI, which calls itself the “largest provider of anonymized location intelligence data” for the US. Simply put, it means that it measures the movement of mobile devices in and out of office towers.

Among its provocative findings:

  • The average Manhattan “visitation” rate in 2022 is up from 60% of pre-pandemic 2019, compared to 48% in 2021 when Omicron’s fears continue to keep many employees at home.
  • Occupancy rates in nearly two-thirds of buildings exceeded 50% of pre-pandemic figures.
  • In 2022 the gap between occupancy in Class A and Class B buildings widened significantly – Class B saw an average occupancy of 66.3% compared to an average of 53.6%.
  • The disparity was most pronounced in so-called Class A-plus buildings, a category that includes state-of-the-art towers such as One Bryant Park, One Vanderbilt and the new World Trade Center. Such “trophy” places increase from 45.1% of 2019 levels in 2021 to 66.3% in 2022.
  • The highest “occupancy” rate compared to 2019 occupancy was in downtown Class A-plus buildings at 71%.

The REBNY approach differs from the Kastle survey in several important aspects. It consists of 250 towers of all classes with a total square foot of 180 million square feet, which is about a third of Manhattan’s total inventory.

Occupancy rates in Class A-plus buildings like One Vanderbilt increase to 66.3% in 2022.
Occupancy rates in Class A-plus buildings like One Vanderbilt increase to 66.3% in 2022.
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The sample includes properties owned by the largest commercial landlords such as SL Green, Vornado, Related Companies and Brookfield Properties, as well as some owner-occupied. Although Rebny would not mention specific locations, the latter category could include Morgan Stanley’s 1585 Broadway and Goldman Sachs’ 200 West Street.

Kastle’s 200-building sample, on the other hand, includes some suburban office parks — but almost no properties owned by Manhattan’s biggest landlords. This matters because most of their large buildings, typically leased to financial services and law firms, have more physical occupancy than smaller ones – which may account for Kastle’s less than 50% occupancy compared to 2019.

CBRE chief research analyst Nicole LaRusso, who did not work on the REBNY survey, said that “good research confirms what you know but cannot prove.” Recently had a sense of occupancy [lower] The numbers don’t seem right.

Zachary Steinberg, REBNY’s senior vice president for policy, said, “The bigger lesson from this is that what’s happening with office space is not monolithic. If we treat it as such, it’s a mistake and an affront to important nuances .

Steinberg said, “The data suggest substantial variation in visit [occupancy] Class A-Plus, between Class A and Class B buildings.

The report’s creators emphasized that neither Kastel’s numbers nor REBNY’s reflect actual current occupancy, but what percentage were they before the pandemic,

In fact, anyone who worked in a Manhattan office knows that 100% occupancy was largely a myth before COVID-19. CBRE’s LaRusso said his firm estimated that employees were in their offices an average of 4.5 days a week.

The pre-pandemic estimate of REBNY was even lower, at only about 70% based on “anecdotal” estimates from landlords.

In the coming months, REBNY plans to dive deeper into this topic with more “granular” data from about office returns. It will likely include more details, for example, about how low attendance is on Mondays (when Vornado president Steven Roth recently called it “touch and go”) and very alarmingly, near-empty on Fridays.

But the survey is already a welcome breath of fresh air on a situation that has prompted premature scare stories about market collapse based on a very small handful of failures.

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