During the first four months of 2023, the amount of available office space for lease in Manhattan reached a record high, as reported by real estate firm Colliers. The total square footage of available office space in Manhattan, approximately 94 million, has set a new record.
The empty office space in Manhattan is now greater than the combined empty space in Houston and Dallas-Fort Worth. According to JLL, some of the neighborhoods in Manhattan with the highest vacancy rates are the Financial District in Lower Manhattan, with 25.6% vacant space and the Times Square in Midtown, with 19.9% vacant space.
What Does This Mean for Ney York City’s Economy?
Before the pandemic, office buildings played a major role in New York City’s economy. Over 1.5 million employees working in the city spent money on food, retail, entertainment and more, contributing to the city’s economy.
The current state of high office vacancies is concerning for New York City’s economy as office buildings are a vital source of revenue for the city. Commercial buildings include 40% of total property-tax revenue, which translates into one-third of the city’s annual income or $31 billion.
The decline in office has resulted in the devaluation of buildings, leading to reduced tax revenues for the city. If the decrease in office use continues, it could further strain the city’s budget.
Specialists are worried about the industry’s future, given its high vacancy rates and increased interest rates. New York City and other municipalities have proposed converting some office buildings into residential properties.
However, developers caution that converting an office building into apartments or condominiums is expensive and not that simple.