Real Estate

Pessimists were wrong: A great NYC office exodus didn’t happen

The city’s office market is wearing a smaller shoe size due to the pandemic — but the footprint shrank by much less than was feared.

The 100 largest New York City office tenants slashed their space by only 7.4 percent since the start of the pandemic, according to a new survey by leading brokerage CBRE.

Some brokers and analysts had predicted space cuts by now of up to 25 percent in the Big Apple’s half-billion square feet of offices after the pandemic took hold in April 2020.

Stamford, Conn.-based real estate investment firm Land & Buildings in May of that year forecast an “existential hurricane” that would devastate the Manhattan market.

But the unexpectedly modest reductions tracked by CBRE, combined with robust large-scale leasing in recent months, suggest that the much-feared work-from-home phenomenon has not crippled the market — at least not yet.

The Brooklyn Navy Yard
The Brooklyn Navy Yard has seen “strong demand for leasing activity,”

“The largest 100 occupiers represent one-third of all Manhattan office space,” CBRE dealmaker Paul Myers told The Post. “And the largest users drive the entire market.”
“We don’t have all the stats yet, but I actually think that smaller companies are expanding more than the large ones,” Myers said.

Myers said it was too early to tell what effect the new Omicron variant would have on office leasing, but said he was “hopeful” it “will be even smaller than the minimal effect from the Delta variant.”

Developer-landlord William Rudin, whose family-owned empire controls tens of millions of square feet of Manhattan and Brooklyn office space, said, “I’m not surprised” to hear about the report’s findings, which he had not yet seen.

“We see strong demand and leasing activity across our portfolio, including at Dock 72 [at the Brooklyn Navy Yard]. I think this report will validate what we’ve been seeing.”

Prospective tenants have been enthusiastically touring 80 Pine St. and Three Times Square, two Rudin properties that are vacant, and deals are likely to be inked soon, Rudin said.

William Rudin speaks at a REBNY event
Real estate magnate William Rudin reports seeing robust interest in space at office buildings Three Times Square and 80 Pine St.

CBRE previously reported that third-quarter leasing was the strongest since the pandemic’s onset. The 3Q total of 5.88 million square feet jumped 70 percent over 2Q, chipping into still-high availability.

Helping to offset contractions by companies such as Advance, which owns Condé Nast, were expansions by Facebook and Blackstone.

Jumbo new leases of at least 100,000 square feet each were signed this year for Turner Construction at The Spiral, Chubb Group at 550 Madison Ave., law firm Venable at OneFiveOne (formerly Four Times Square), Mintz, Levin Cohn at 919 Third Ave. and Schrodinger Inc. at 1540 Broadway. In February, Suntory signed for 100,000 square feet at 11 Madison Ave.

“Not exactly a market on its last legs, is it?” mused one famously press-shy landlord.
More jumbos are in the works. Sources said that real estate brokerage Cushman & Wakefield, a chief competitor of CBRE, is “circling” 660 Fifth Ave. for up to 250,000 square feet for its own use.

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