Office attendance in the country’s largest cities is lower than it was before COVID, with vacancy rates at a record high of 19.1%, The New York Times reports. Chicago, Houston and San Francisco are running above 20%, and in New York, with the most office space of all, attendance remains less than half its pre-pandemic average.
Companies are moving from the traditional core in midtown Manhattan to newer – and smaller – buildings elsewhere in the borough. Take KPMG, for example. The newspaper reports that the Big 4 firm is moving from three aging buildings into a space that is 40% smaller on the edge of Hudson Yards on Manhattan’s west side. KPMG, like many companies, has adopted a hybrid model of employees who work fully in-office, fully remote and a mixture of both.
Overall, the value of U.S. office buildings could drop 39%, or $454 billion, in the coming years, according to a recent study by business professors at Columbia and New York University, the newspaper reported. Co-author Stijn Van Nieuwerburgh says New York office space on average costs about $16,000 a year per employee. “That’s real money,” he said, “and companies will try to save that.”
Still, some observers believe demand will return. William Rudin, a New York developer and landlord, told The Times said executives have reduced space in downturns but change their minds when the economy improves, and say, “ ‘Oh, my God, we don’t have enough space. We’ve got to take more space.’ ”
