It’s no secret that NYC commercial real estate has taken a hit since COVID hit our shores, but just how bad are we talking about?
According to the Alliance for Downtown New York, a nonprofit which specializes in all things “Lower Manhattan” -- including tourism rates, business operations, cultural events, and public services -- the pandemic’s financial impact is now estimated to be greater than both the 2008 Global Financial Crisis and the September 11, 2001 terrorist attacks.
Spurred (and sustained) by the crucial pivot by most employers to remote working beginning March of 2020 -- an estimated 90% of the city’s workforce has still yet to return to physical office spaces. While remote working was initially vital to maintaining some semblance of operations and preventing businesses (particularly, the small to mid-size ones) from going belly up, employers soon uncovered some unexpected benefits which included lower overhead costs, increased productivity, and a happier work force.
However, since most are still remoting-in from their couches and dining room tables, office vacancies in Manhattan have hit their highest number in two decades, ringing in at 13.7 percent. In addition, almost 50% of Manhattan’s residents have fled the city in the past year, pushing the residential market to levels not seen since 2011.
2020 recorded the lowest level of annual leasing space on record, with only 2.25 million square feet rented -- compared to 5.6 million in 2002, following the 9/11 attacks, and 3.1 million and 2.9 million in 2008 and 2009, respectively, following the financial crisis.
“By the numbers, the short-term economic impact of COVID-19 is deep and troubling. We are doing what we can at the Alliance to help our struggling businesses keep the lights on and look towards a better day,” professed Jessica Lappin, president of the Alliance, “While it’s still too early to say exactly what the lasting effect will be on Lower Manhattan, there are reasons for hope on the horizon. We’ve seen this neighborhood overcome obstacles time and time again.”
And that optimism may hold true, as large businesses and deep pocketed retailers are taking advantage of the downturn and scooping up some prime locations. Financial institutions such as AIG, Fred Alger Management, and the Securities and Exchange Commission have all leased big spaces downtown in the last few months.
And with the weather is warming up, the city’s Open Storefronts Program (which allowed shops and restaurants to operate throughout the shutdowns) will likely spur success in the spring and summer - with over 140 downtown restaurants expected to offer outdoor dining.
While the pandemic has certainly taken a huge bite out of the Big Apple, to quote the anti-hero of Gotham City: “The night is always darkest just before the dawn.”
And despite the naysayers, this town has been proven, time and again, that it has a mythical-like resiliency that will see it through to the other side.