As the New York City office market continues to struggle with high vacancy rates and declining asking rents, many office tenants are shrinking or completely closing their offices, agreeing with the reality of a hybrid or fully remote workforce. deleting.
Two major New York moving companies told the Commercial Observer in late September that a significant number of commercial offices have been moved into vaults and that more companies are selling or auctioning off office furniture this year.
Dumbo Moving and Storage CEO Lior Rachmany said there has been a significant increase in the number of companies liquidating office furniture in the past two quarters compared to last year. The Brooklyn-based mover has done about 1,000 small and midsize office moves during the height of the pandemic (roughly March 2020 to March 2021 for him). This is him 150% more than in 2019. Most of these companies have moved out of their warehouses this year, but about 30%, or 300 companies, have chosen to ditch their furniture.
“People weren’t coming to the office and companies decided to either cancel their leases or not renew them,” says Rachmany. “There is not much going back to the office when it comes to storage. Day by day, 2022 will see even more downsizing. I will take you to
He also noticed that more and more small and medium-sized law and financial firms were relocating to suburbs in Connecticut, New Jersey and Long Island. This is because he serves workers remotely and saves money on his space in an expensive Manhattan office. According to data from Dumbo Moving, this correlated with his 300% increase in people moving from New York City to the suburbs of his tri-state area between 2020 and his 2021.
“During the pandemic, many young professionals fled the city, moving within a 50 to 100-mile radius, and many never returned to the city,” Rachmany said.
Voyo Popovic, which operates Manhattan-based Piece of Cake Moving and Storage, observed a trend very similar to commercial moves over the course of the pandemic. 18% of were saved. Only 12% of office moves this year ended up in storage. He has also seen an increase in companies disposing of office furniture. This is because whether it’s in storage or on the move, it promises to either shrink your workspace or let it go completely.
“A lot of the commercial moves ended up being desk and chair disposal services,” Popovich explained. “At these companies, all or most of the teams are working remotely. Now that it has proven to work, companies no longer need to have many desks in their offices.”
Rather than signing new long-term office leases, many small businesses are looking to coworking locations and shared desk spaces. WeWork’s preferred mover, Rachmani, said coworking spaces are more attractive than they were pre-pandemic due to lower prices per desk. Coworking also gives companies the flexibility to change the amount of space they rent on a weekly or monthly basis.
“I think small startups and small businesses have found this to be more effective,” Rachmani explains. “They don’t have to own furniture. They don’t have to bring their own. They don’t need assets or movers.
Piece of Cake also found that more businesses are leaving the city this year. 9% of his commercial customers will leave him five governorates in 2021, but by 2022 that figure has increased to 11%. The top three destinations leaving New York City were Connecticut, New Jersey and Florida. Financial companies, in particular, had fled to suburban Connecticut suburbs such as Westport, Stamford, and Greenwich. Those heading to New Jersey also ended up in Hoboken, Jersey City and Newark. Also, most of the companies headed for the Sunshine State were moving to Miami.
“Why pay for Fifth Avenue when you can lower your rent and get closer to people?” Popovich asked.
The impact of businesses shrinking or moving to cheaper neighborhoods is rippled across the New York City office market. According to JLL, Manhattan’s office vacancy rate will hit a 20-year high of 16% in the second quarter of 2022. latest market reportAverage asking rents for direct office space also fell 3% in the second quarter to $80 per square foot, while asking rents for subleased space decreased slightly to $60 per square foot.
These shifts are primarily due to the move of tech and creative tenants, but we also added 1.7 million square feet of subleased available space in the second quarter. Colliers said that since March 2020, available supply has increased by 72% to a total of 92.8 million square feet.
Meta and Amazon also scrapped a planned Manhattan expansion this summer, making commercial office owners nervous. Meta, formerly known as Facebook, bailed Plans to expand NoHo’s 300,000-square-foot office at 770 Broadway. Meanwhile, Amazon cut the amount of space he planned to sublease from JP Morgan at Hudson Yards.
“Like many businesses, we are still learning how these new habits affect our office footprint. Said wall street journal In an article about the company’s decision to pause construction of six new offices this summer in Nashville and Bellevue, Washington.
Ultimately, Popovic of Piece of Cake Movers felt that small offices and hybrid work would take hold.
“The most interesting trend is that big offices are moving to smaller offices because that’s what we read in the news every day,” he said. “Companies have set policies for part-time remote work or full-time remote work, and have stricter working hours. There is none.”