Fear of the coronavirus is holding back the return to downtown skyscrapers, causing considerable losses to the city’s economy and the rout of an entire ecosystem made up of restaurants and businesses that depend primarily on office workers.
Ruth Colp-Haber and her husband Eric, who run a real estate agency, find as the days go by that the city’s pulse remains weak.
The iconic skyscrapers of Midtown, Manhattan’s business district, are still mostly empty, or almost empty. The same goes for the building where Ruth and Eric’s office is located. The other tenants upstairs, who left during confinement, did not return. Usually there are a hundred of them.
Even though the economic hiatus is over, workers are dribbling back to the office. The virus still scares them.
Ruth Colp-Haber, a fourth generation New Yorker, had to adapt to this new situation. She now works at home.
I think it’s fair to say that my job these days is sort of selling ice in the far north or sand in the desert. No one wants to rent an office.
Commercial real estate in free fall
According to a survey by the Partnership for NY City, an organization representing business people, about 10% of office workers were back by the end of the summer. There are about 2% more now.
Only a quarter of workers will populate office towers again at the end of the year, and half next July. If the pandemic has paralyzed the city, the craze for teleworking undermined it further. The rental of commercial space has taken a breathtaking plunge.
Natalie Wong is a journalist specializing in the field of commercial real estate for the Bloomberg agency. She left Toronto to follow closely the turmoil in the financial health of the business mecca.
To illustrate the real estate situation in the American metropolis, she gives the example of the One Vanderbilt building, which was supposed to breathe new life into the city center.
One Vanderbilt, a new 1.7 million square foot office building. It is the newest skyscraper in the Midtown business district. It was inaugurated last week. Unfortunately, it is practically empty.
The new 67-story One Vanderbilt building on the eve of its opening
Photo : Reuters / MIKE SEGAR
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<q data-attributes="{"lang":{"value":"fr","label":"Français"},"value":{"html":"On a presque battu des records en 2019. On a loué des locaux pour bureaux représentant plus de 30million square feet. This year, the number of leases signed so far totals just over 13million square feet “,” text “:” We almost broke records in 2019. We have rented office space representing more than 30 million square feet. This year, the number of leases signed so far totals just over 13million square feet “}}” lang = “fr”>We almost broke records in 2019. We rented office space representing more than 30 million square feet. This year, the number of leases signed so far totals just over 13 million square feet, she says.
It’s a real disaster for New York. Office buildings totaling 470 million square feet generate nearly 10% of its tax revenue. It’s a whole part of the economy that depends on them for survival: restaurants, businesses, hotels, retailers.
A strangled city
Every day, New Yorkers discover a new closure, a new bankruptcy. Over the weeks, hundreds of thousands of jobs disappear, billions of dollars in tax revenue too.
The City of New York, already heavily in debt, does not know where to turn. The reduction in services is already starting to be felt.
The mayor has already reduced the frequency of garbage collection in New York. Waste collection no longer takes place every day. The City has reduced its services
says Ben Kallos, city councilor for East Harlem, Midtown, Murray Hill, Roosevelt Island and the Upper East Side of Manhattan.
The coronavirus crisis has already cost the City $ 10 billion.
Mayor Bill de Blasio has asked New York State for permission to borrow $ 5 billion to finance current spending. He threatened to lay off 22,000 employees.
Voices are being raised to convince, or even force, workers to return to the office.
Financial institutions are finding that telecommuting is not a panacea and that it hurts productivity.
Frankly, there are a lot of lazy people out there who need supervision. Managers need to keep an eye on them. You know, there are a lot of people for whom the job is not great.
Building owners are realizing that their hegemony is a thing of the past. They know they will have to do their part to retain their tenants: lower rents and accept shorter-term agreements. No more leases of 10 or 20 years.
Digital giants occupy space
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What future for Manhattan office towers?
Photo : Reuters / Mike Segar
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For their part, some companies are reassessing their square footage needs and looking for smaller spaces.
But all is not gloomy in this portrait. Multinationals are going against the grain.
Amazon has just acquired a building on 5th Avenue for $ 1 billion. A little further, Facebook has just rented 730,000 square feet. TikTok signed another lease in Midtown earlier this year amid a pandemic. Companies have confidence in the long-term performance of the markets
, says Natalie Wong.
New York is looking for solutions. Town planners believe that they reside in the capacity of the metropolis to accept and integrate a new deal. Telework is not set to disappear.
We need to redefine the concept of the office, create COVID-proof spaces and promote a hybrid approach that promotes both telework and office presence. It’s part of the solutions
says Douglas Woodward, associate professor of urban planning at Columbia University’s Graduate School of Architecture Planning.
Urban planner Sybil Wa agrees. Rockefeller Center is a prime example of a mixed-use shopping complex. There are the television studios that everyone knows, a restaurant, exhibitions, all kinds of shops. It is a multi-purpose building
, she emphasizes.
We’ll need some sort of Marshall plan
In the short term, initiatives are emerging to give a semblance of normalcy to the city.
The Philharmonic Orchestra gives free outdoor concerts. Artists use vacant business premises.
More than ever, New Yorkers are betting on a vaccine against the virus.
In the short term, it’s very, very difficult
, thinks Eric Haber. For her part, Ruth Colp-Haber dreams of a more immediate solution. We will need Washington’s help. We will need a lot, a lot of money. In my opinion, we will need some sort of Marshall plan
, she says.
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