New York City Office Space to Grow, But How Fast?
Those who are stubbornly optimistic about the return of the Manhattan office market might want to take a close look at this report from the New York Building Congress.
It looks like major commercial development in Manhattan is still sluggish, which is no surprise considering the recent recession. In fact, the report blames the downturn in significant new office construction on the “dramatic decline in employment along with a sharp rise in office vacancies.”
Still, ever-positive as the Building Congress is, the trade group sees a silver lining to this slowdown. “The ingredients exist for a major mid-decade surge in new office construction,” according to the report. All the while, 2011 marks the first year since 2000 that Manhattan will not see a major new office tower open. But 2012 and 2013 look more hopeful: the Gem Tower should be completed by next year, with 1 and 4 World Trade Center following in 2013.
The report also shows that development is lagging by historical standards. In the 1970s and 1980s, Manhattan saw about 4 million square feet of new office space crop up annually, and 6 million square feet of new office space in the 1960s.
So will office construction rebound to where it once was? After all, the National Bureau of Economic Research declared the Great Recession to be officially over last September. And there is some major construction in the works for the coming years, including 2 and 3 World Trade Center (which still need actual tenants, but could have a few on the hook).
Still, even with the boom last decade, when nearly 20 million square feet was built, the 13.5 million lost on 9/11 is a major factor in the city’s supply, and New York only realized new offices at about half the rate of previous decades.
“It is remarkable how little office space was actually added in Manhattan during the recent building boom,” Building Congress President Richard Anderson said in a release. “In fact, New York City has gone two full decades without a significant expansion of its office stock.”