Morgan Stanley Planning ‘Full Return’ to Midtown Headquarters
The bank's CEO famously mulled a more hybrid work schedule for employees
Morgan Stanley plans to fully return its employees to its Midtown headquarters at 1585 Broadway, though some employees may be able to work remotely from time to time.
“We plan a full return to the Midtown office when it is safe to do so, but we expect some flexibility for employees to work from home during some of the week,” a Morgan Stanley spokesperson told Commercial Observer late last week. “Those arrangements will vary widely based on the employee and job.”
The bank has been at the more than 1.33 million-square-foot 1585 Broadway since 1995, two years after it bought the tower between West 47th and 48th streets. Morgan Stanley occupies nearly 78,000 square feet in the building, according to CoStar Group.
The bank — one of the nation’s 20 largest by assets — had flirted a few years ago with a move to the under-construction 50 Hudson Yards, but decided to stay put. (The bank also rents nearly 565,000 square feet at Midtown’s 522 Fifth Avenue, which it agreed to sell to RFR Realty in early 2020 for $350 million, Crain’s New York Business reported.)
Morgan Stanley CEO and Chairman James Gorman had rattled the commercial real estate industry when he said on Bloomberg Television in April 2020 that he could envision his company using less office space in the near future. Gorman was reportedly impressed by how smoothly Morgan Stanley’s employees transitioned to remote work in the wake of COVID-19.
“Clearly, we’ve figured out how to operate with much less real estate,” Gorman said. “Can I see a future where part of every week, certainly part of every month, a lot of our employees will be at home? Absolutely.”
The company’s decision in favor of a full return when it’s safe to do so will be welcome news for Manhattan landlords, of course. They’ve seen asking rents and leasing activity plunge during COVID; and a surfeit of sublease space continues to drag on those rents.
New data, though, suggests that demand for office space — Midtown’s in particular — is picking up.
The average number of new tenant tours of Midtown office space was 64 percent higher year to date in 2021 through the first week of March, compared with the average from early July to late November 2020, according to proptech firm VTS, which tracks tenant demand for non-Class C space.
That average of 23 tours per week in Midtown is still well below pre-pandemic figures, but it represents a marked increase in what VTS describes as “new requirement velocity” compared with the fall, when the weekly average was 14. Still, it’ll likely be years before the Midtown, or wider Manhattan, office market returns to post-COVID levels of demand.