Why co-working spaces are betting on the suburbs
A recent analysis by Fitch Ratings concluded that if companies were to adopt only one and a half days of remote work per week, office landlords’ profits would drop by 15 percent. In three days, the income will decrease by 30 percent.
Jim Whelan, chairman of the Real Estate Board of New York, a lobbying organization that represents major developers, said his employees have been required to work five days a week in the office since the summer. He believes that buildings in Manhattan will be filled in to entice companies to re-lease as cheap commercial rents.
He questioned why employees would use a co-working space on their work-from-home days and brushed off the possibility of employees working remotely for weeks after the pandemic, calling it “your alternate universe.”
“Over time, we are going to work on a five-day-a-week schedule,” Mr. Whelan said. “There are signs that the commercial market is growing at leasing pace and how many tenants are looking for space.”
In the New York area, about 32 percent of employees were in the office in mid-October, according to Kastel Systems, a security company that tracks employee card swipes in office buildings. The percentage has climbed steadily since Labor Day, but is still half of what employers predicted in a June survey by the Partnership for New York City, a business advocacy group.
According to the New York State Controller’s Office, a major calculation around office space could unfold in the coming years, as an estimated 30 percent of leases in Manhattan’s larger buildings will expire by 2024. Economists say a big question is whether large companies will retain their office space to guarantee seats for all employees, no matter how many days a week they come.
New York City’s office buildings are valued at an estimated $172 billion and provide about 20 percent of the city’s property tax revenue. As newly leased during the pandemic, the value of buildings declined by $28.6 billion, the first drop in at least 20 years, according to the New York State Comptroller’s Office, due to more than $850 million in property taxes in the city. The cost came
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