NY’s End of Some Pandemic Restrictions Sparks Optimism in Real Estate
When Gov. Kathy Hochul lifted New York’s state mask mandate earlier last month as coronavirus cases in the state began to decline, she called the move a sign of “tremendous progress after two long years” of the pandemic.
As Mayor Eric Adams plans to drop the vaccination requirement for indoor dining, gyms and entertainment venues as early as March 7 if coronavirus cases continue to decline, the city’s real estate community is hoping that the lessening precautions will encourage workers to return to office towers.
“[I’m feeling] cautiously optimistic,” said Jordan Barowitz, vice president of public affairs for The Durst Organization. “The rates of vaccination are high, the COVID-19 rates are low and treatments have improved. We have our fingers crossed.”
And office occupancy at Durst-owned buildings has steadily increased recently. In December 2021, Durst’s New York City office portfolio had an occupancy rate of around 45 percent but it dropped to about 10 percent this January thanks to the omicron variant. However, it bounced back to 20 percent in February and just above 40 percent by the end of that month, Barowitz said.
Durst isn’t alone in seeing occupancy tick back up.
The 51, mostly Class A, buildings that JLL manages in Midtown and Downtown saw an occupancy rate of 19 percent in January and 27 percent in February, according to Caroline Gadaleta, JLL’s managing director and tri-state head of property management.
“Just the idea of easing the mandates is bringing people back to work,” said Gadaleta. “I’d say, generally, people have been very obedient when it comes to these mandates. They want to do the right thing. They want to take care of their fellow men and women. But now that [the rules are] easing, I think that, combined with the fatigue and the desire to move on from COVID-19, it’s creating a momentum both for companies and for individuals.”
Industry trade group the Real Estate Board of New York (REBNY) is expecting more workers to head back to their morning commutes if the pandemic continues to subside. Coronavirus cases in New York City have been on the decline since January to below 1,000 cases per day and deaths have similarly dropped, according to city data. At the same time, 86 percent of city residents are partially vaccinated, and 77 percent are fully vaccinated.
“Incrementally lifting restrictions following guidance from public health experts is a sign that things are moving in the right direction for the real estate industry and New York’s broader economy,” Zachary Schechter-Steinberg, senior vice president of policy at REBNY, said in a statement. “As infection rates continue to decline following the omicron wave, we expect an increasing number of employees will return to the office, as we saw in November and early December.”
But the end of pandemic-era restrictions doesn’t necessarily mean the end of work from home, said Joanna Frank, the president and CEO of the Center for Active Design, a firm that helps design healthy buildings and operates the Fitwel certification system. Over the past two years, staffers have proven that, in many industries, the office isn’t the only way to do their jobs and companies will have to do more than just ask their workers to head back to their desks.
“The lifting of restrictions isn’t going to make the difference as to whether your employees start to come back into the office — that is a piece of the puzzle, but it’s not what is preventing people from going back to the office right now,” Frank said.
Landlords and companies will have to prove that their spaces are beneficial for a worker’s mental and physical health, as employees always have the choice to work for a business that offers more flexibiilty on where to work, according to Frank. While staffers of office buildings tend to be less stressed than those logging on from their homes, Frank said companies need to communicate that message clearly.
It’s no secret that real estate executives and politicians want workers back in officer towers, arguing it supports the city’s economy (though it certainly doesn’t hurt an office-owner’s bottom line to have tenants). In her short time as governor, Hochul has twice called on companies to get its employees back to the office and Adams criticized work-from-home policies last month by saying, “You can’t stay in your pajamas all day.”
Nationally, President Joseph Biden and his administration plans on accelerating federal staffers’ return to the office, Axios reported. (Former Mayor Bill de Blasio previously called New York City’s municipal workers back to the office in May 2021.)
For local businesses still reeling from the effects of the pandemic, Randy Peers, president and CEO of the Brooklyn Chamber of Commerce, called the lifting of the vaccination requirement for indoor dining and other venues key to establishing a sense of normalcy.
“We must continue to be safe and vigilant protecting against COVID-19, but Adams lifting the vaccine requirement is an important milestone for Brooklyn’s 62,000 small businesses and workers who are ready to return a sense of normalcy to the borough and accelerate the city’s unsteady economic recovery,” Peers said in a statement.
But for those office workers that enjoy visiting local small businesses, the world probably won’t simply revert back to the pre-pandemic days of spending at least 40 hours a week in an office building, Gadeleta said.
“I do think that a big result of COVID is going to be greater flexibility for everyone,” Gadaleta said. “Now, it seems everybody wants to get in on the flexibility bandwagon. … It’s obvious to me that landlords are thinking very deeply about how to partner with their tenants, to help attract people back to the buildings.”
Celia Young can be reached at firstname.lastname@example.org.