New York Market Overview

Office:

Landlords have reduced office rent. Average asking Manhattan office rent in the second quarter was $72.77 a foot, down 8.2% from a year ago, and down 0.6% from the first quarter.

Leasing volume from April through June was 4.5 million square feet, which was up by 43% from the same period last year, but unchanged from the first quarter which was 45% lower than Manhattan’s five-year rolling average, 8.27 million square feet.

There was a gradual tightening of subleasing availability as companies reduced the amount of space they had for sublease. Manhattan sublet availability shrank by 340,000 square feet during the second quarter, the first quarterly net decline in two years. The share of sublet listings represented 22.8% of Manhattan’s total availability, down from 24.5% in the first quarter.

Manhattan office occupancy remained at just 41% of its pre-lockdown office use. During the stay-at-home orders, office use in Manhattan plummeted to 17% of the average for the first quarter of 2020. Reliance on public transportation explained the lower office usage during lockdown and their slower return.

The Delta variant has put employers’ return-to-work plans in a state of flux. Earlier this week, the CDC updated its public health recommendations, asking the fully vaccinated to resume wearing masks indoors. Office tenants are now preparing to deal with the fallout. Tension appears to be rising between workers and employers, which may prompt unions to get involved. Some are beginning to call for either more safety protocols or pushing back on vaccine requirements.

Apple will delay its employees’ return to the office until October 1 due to the Delta variant spread.

Many employees around the country have been resisting calls to return to the office. Some employees have even considered quitting their jobs, as they reevaluate their priorities amid the pandemic in what some economists are calling the “Great Resignation.”

In New York City, the rate of positive cases was 1.72% on July 18, an increase from 1.37% a week earlier.

In New York City, commercial and residential properties account for 70% of all greenhouse gas emissions. This has prompted the city to mandate an emissions cap on all buildings larger than 25,000 square feet, effective 2024.

Empire State Realty Trust is bracing for its second largest tenant to exit its office property. While the real estate investment trust reported a second quarter uptick in leases across its portfolio, the Empire State Building has just filed Chapter 11 proceedings.

Retail:

The Kmart located at 770 Broadway has closed and will be replaced with Wegmans.

Equinox is being sued for skipping out on more than $3.3 million in rent and other charges at 568 Broadway, rent runs at $172,000 per month, not including taxes and utilities. A group of investors led by Allied Partners say they have not received a rent payment since April 2020.

Gyms faced challenges during lockdown when they were not allowed to open until late August. Many gyms have reopened for months offering reduced class sizes and options for remote instruction.

The $28.6 billion Restaurant Revitalization Fund, for struggling restaurants, has run dry. 370,000 restaurants applied, seeking $75 billion in assistance. Only 105,000 were approved for grants, averaging about $272,000 each.

The pandemic ravaged restaurants and bars, as they were unable to operate at full capacity for months. 90,000 restaurants or around 14% of all eateries across the U.S. have closed permanently or long-term.