NYC Office Demand and Visitations Saw Steady Rise in December
By Mark Hallum January 31, 2024 1:20 pm
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The New York City office market started showing signs of life as building visitations are up and demand is on a steady sixth-month increase, according to data released this week.
Companies nationwide looking for office space have climbed 19.6 percent since its lowest point in December 2022, according to the quarterly Office Demand Index report from property and asset management firm VTS.
Meanwhile, the Real Estate Board of New York (REBNY) used Placer.ai data to determine that visitations to Manhattan office buildings increased to 67 percent of pre-pandemic levels in December.
“The first step in the recovery of the office market is to stop the bleeding, and according to our data, we likely have,” Nick Romito, the CEO of VTS, said in a statement. However, it is still too early to say office demand nationally has bottomed out and is now on the rise.
“Today, the office market is stable, but it is also fragile,” Romito added. “While the cards are stacked in favor of a slow but steady recovery, it wouldn’t take much to startle employers again and pause any upward momentum.”
The VTS data found that New York City saw a 38.9 percent growth in tenants looking for space larger than 50,000 square feet in 2023, while Los Angeles saw a 46.8 percent spike.
Meanwhile, REBNY’s report — which tracks foot traffic to 350 buildings in Manhattan — found that Class A office space by itself saw a 74 percent of pre-pandemic levels in December compared to 72 percent in November. The report said figures would have been even higher and would have outpaced any month since 2019 if not for a dip in activity blamed on the holiday season.
Thanks a lot, Santa.
“At a time when office visitation appears to be stalling in some cities, it is encouraging to see activity steadily ticking back up in much of Manhattan, even as it remains well below 2019 levels,” Keith DeCoster, director of market data and policy at REBNY, said in a statement. “The positive spillover from a recovering office market on the city’s business districts, its retail sector and the city’s revenues can not be understated.”
As per usual with real estate, it’s about location, location, location.
Midtown visitations increased from 66 percent in November to 73 percent in the last month of 2023 with Midtown South sitting at 68 percent compared to the same percentage in November, However, Downtown fell slightly from 55 percent in November to 54 percent in December.
All the buildings analyzed by REBNY were built prior to 2019, according to the trade organization.
Mark Hallum can be reached at mhallum@commercialobserver.com.
