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New NYC Office Demand Craters Despite Leasing Activity Hitting New Highs

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New demand for office space in New York City fell for the third month in a row in August, down 23% from the previous month, according to new data from a real estate software company. VTS.

Demand for office space in New York City has hit its lowest level since February 2021 and is now 44% below its pre-pandemic pace, according to VTS.

Nationally, demand for office space fell 11.5% from July to August, with New York experiencing the largest decline of any city. In Los Angeles demand he fell 14%, while in Seattle he recorded a 13.7% decline.

“The slowdown in summer office demand is typical, but it remains to be seen whether this downward trend will continue or if office demand levels will simply settle into a new ‘post-pandemic normal’,” said VTS CEO. Nick Romito said in a statement. “Economic concerns, especially inflation and rising interest ratescreated a cloud of uncertainty hanging above office rental market. “

According to VTS, the number of new tenants seeking office space in 2018 and 2019 is less than half what it was before the pandemic.

Despite a decline in new demand, August Best month since the pandemic started Colliers said of the lease agreement for the Manhattan office. About 3.4 million square feet of office space in the borough was leased in August. This is an 8% increase from July and a 40% increase from August 2021. Vacancy also fell slightly, dropping to its lowest level since April 2021.

Demand reportedly fell most in markets where the finance, insurance and real estate sectors are large employers, and VTS said concerns over rising interest rates and economic uncertainty were impacting industry profit margins. We believe that there is a possibility that

Still the demand Class A office NYC space continues to thrive, spotted by VTS. Although overall demand for office tours in the city declined in July and August, demand for tours of Trophy office properties and Class A spaces increased.

“Not quantity, escape to quality Chief Strategy Officer, VTS Ryan Masiero said in a statement. “Trophy and Class A Tour share rose from 71.2% in June to 76.9% in August, reflecting the resilience of quality leases in the market. .”

Rents for Class A properties are also rising, and while landlords are offering concessions, demand for high-quality offices in NYC remains strong, said JLL Vice President Lauren Calandriello. Said Bissnow last month.

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