Remote work is here to stay: Manhattan may never be the same

[the urban politician]

Some of the city boosters here seem to be in denial. Many have been the most pro-shutdown ("stop whining and work from home, to hell with the livelihoods we've just damaged!") types. But it looks more and more like you want to have your cake and eat it too. The overly rigid policies and fears that many in your corner have espoused have had.....lets just say......consequences:

Remote Work Is Here to Stay. Manhattan May Never Be the Same.

New York City, long buoyed by the flow of commuters into its towering office buildings, faces a cataclysmic challenge, even when the pandemic ends.

Credit...Jonah Markowitz for The New York Times

Matthew Haag
By Matthew Haag
Published March 29, 2021
Updated March 30, 2021
Spotify’s headquarters in the United States fills 16 floors of 4 World Trade Center, a towering office building in Lower Manhattan that was the first to rise on the site of the 2001 terror attacks. Its offices will probably never be full again: Spotify has told employees they can work anywhere, even in another state.

A few floors down, MediaMath, an advertising tech company, is planning to abandon its space, a decision fueled by its new remote-work arrangements during the pandemic.

In Midtown Manhattan, Salesforce, whose name adorns a 630-foot building overlooking Bryant Park, expects workers to be in the office just one to three days a week. A nearby law firm, Lowenstein Sandler, is weighing whether to renew its lease on its Avenue of the Americas office, where 140 lawyers used to work five days a week.

“I could find few people, including myself, who think we are going to go back to the way it was,” said Joseph J. Palermo, the firm’s chief operating officer.

A year after the coronavirus sparked an extraordinary exodus of workers from office buildings, what had seemed like a short-term inconvenience is now clearly becoming a permanent and tectonic shift in how and where people work. Employers and employees have both embraced the advantages of remote work, including lower office costs and greater flexibility for employees, especially those with families.

Beyond New York, some of the country’s largest cities have yet to see a substantial return of employees, even where there have been less stringent government-imposed lockdowns, and some companies have announced that they are not going to have all workers come back all the time.

In recent weeks, major corporations, including Ford in Michigan and Target in Minnesota, have said they are giving up significant office space because of their changing workplace practices, while Salesforce, whose headquarters occupies the tallest building in San Francisco, said only a small fraction of its employees will be in the office full time.

But no city in the United States, and perhaps the world, must reckon with this transformation more than New York, and in particular Manhattan, an island whose economy has been sustained, from the corner hot dog vendor to Broadway theaters, by more than 1.6 million commuters every day.

Still, about 90 percent of Manhattan office workers are working remotely, a rate that has remained unchanged for months, according to a recent survey of major employers by the Partnership for New York City, an influential business group, which estimated that less than half of office workers would return by September.

https://www.nytimes.com/2021/03/29/n...-pandemic.html

[bilbao58]

Never say never.

[UrbanImpact]

Why do I have the feeling that you're shinning your statuette that you stole from the Capitol insurrection riot over this article?

[JManc]

Does this mean New York will revert to its post apocalyptic former self of the 70's and 80's and we can get more movies like Taxi Driver and Escape from New York?

[bilbao58]

Originally Posted by JManc

Does this mean New York will revert to its post apocalyptic former self of the 70's and 80's and we can get more movies like Taxi Driver and Escape from New York?

And maybe afford to rent an apartment there???

[JManc]

Originally Posted by bilbao58

And maybe afford to rent an apartment there???

Right? A cheap little fixer upper on the UWS.

[iheartthed]

Originally Posted by JManc

Does this mean New York will revert to its post apocalyptic former self of the 70's and 80's and we can get more movies like Taxi Driver and Escape from New York?

What happens to Times Square, since the internet also made porn theaters obsolete?

[JManc]

Originally Posted by iheartthed

What happens to Times Square, since the internet also made porn theaters obsolete?

Hookers, corner dealers and some shady bastard hocking fake Rolexes and Apple Watches in front of the decaying ruins of the M&M store.

[UrbanImpact]

Originally Posted by iheartthed

What happens to Times Square, since the internet also made porn theaters obsolete?

It will be renamed Influencer Square and full of cool instagramable spots for photo sessions.

[iheartthed]

Originally Posted by JManc

Hookers, corner dealers and some shady bastard hocking fake Rolexes and Apple Watches in front of the decaying ruins of the M&M store.

I can't wait until I can buy a fake Apple watch from a booster on the street.

[Innsertnamehere]

I don't think you will see demand for office decline precipitously. You may see it decline 5-10%.. but that will be made up for with market growth in the near future.

What you likely will see is a rapid decline in the population density of offices as people are allowed to work from home more often. They may still have a physical office space, but they won't be there 5 days a week like they were in 2019.

So NYC office vacancies will likely stay relatively low.. but the sidewalks may not be as busy, the subway may not be as crowded, and the traffic may not be as bad.

[the urban politician]

^ Companies won't perpetually lease space that they don't need.

And yes, less busy sidewalks and subways are not a minor problem. They are a catastrophic one.

[iheartthed]

Originally Posted by Innsertnamehere

I don't think you will see demand for office decline precipitously. You may see it decline 5-10%.. but that will be made up for with market growth in the near future.

What you likely will see is a rapid decline in the population density of offices as people are allowed to work from home more often. They may still have a physical office space, but they won't be there 5 days a week like they were in 2019.

So NYC office vacancies will likely stay relatively low.. but the sidewalks may not be as busy, the subway may not be as crowded, and the traffic may not be as bad.

I think that any decline in office occupancy will be balanced by consolidation of office space. Companies will likely consolidate into prime areas and the losers will be the lower cost alternatives to being in Manhattan. I'm more worried about Jersey City than I am about Manhattan, and even then I'm not really that concerned about Jersey City.

[austlar1]

Originally Posted by JManc

Right? A cheap little fixer upper on the UWS.

Or a cheap little fixer upper in a former office building in Midtown?

[the urban politician]

Originally Posted by iheartthed

I think that any decline in office occupancy will be balanced by consolidation of office space. Companies will likely consolidate into prime areas and the losers will be the lower cost alternatives to being in Manhattan. I'm more worried about Jersey City than I am about Manhattan, and even then I'm not really that concerned about Jersey City.

Interesting, although your point seems to run counter to what the article is saying.

What will suffer more: higher cost office space in prime urban centers, or lower cost office space in secondary urban centers?

What a shitty problem to have....

[Innsertnamehere]

Originally Posted by the urban politician

^ Companies won't perpetually lease space that they don't need.

And yes, less busy sidewalks and subways are not a minor problem. They are a catastrophic one.

The thing is they will still need that much space - floating desk models are almost universally hated. some companies will shift to it to allow them to reduce footprints and have people use unassigned desks when they do come into the office.. but there will still be tons of companies that have assigned desks for employees when they are in the office 3 days a week, and they will likely want surge capacities for when they need more employees in the office than typical on any given day.

Companies have been increasing office densities for 15 years now in an effort to cut costs, pushing for less and less square footage per employee. The overall employment density of office spaces will probably return to be closer to that of the 1990's. Not exactly catastrophic.

As for subway ridership and the crowding levels of sidewalks.. businesses will adjust. NYC, and most major downtown cores for that matter, will be fine.

I expect several permanent outcomes from the pandemic:

1. Reduced employment densities in office spaces coming from much larger adoption of work from home policies, combined in a small reduction in overall office demand as some companies shift to floating desk models to cut office space needs;
2. Reduced demand for inner city housing, specifically in large metros. Small metro inner city housing growth is mostly based on lifestyle choice, which will continue at the same pace as before;
3. Reduced travel demand at peak hour, instead spread wider across the day;
4. increased demand for housing in the "exurbs" of large cities - 1-1.5 hours commute from the core. These areas traditionally were too far from the core to be "commutable" for 5 days a week, but people will be more willing if they only have to do it 2-3 times a week instead; and
5. Increased concentration of office employment in centrally accessible locations in metros. Employers will use cost savings from reduced office footprints to move to locations with the largest commuting shed to maximize talent potential.


Unfortunately it's not great news for cities as a whole. It will likely result in large quality of life boosts for millions of people as they are given greater ability to choose their preferred lifestyle, and will likely drive down the cost of living in a city, but it too will drive down the growth that large cities are experiencing.

[eschaton]

Even if we assume the shift away from office space is permanent, there should be a post-pandemic boom in demand for retail and hotels, which will help city cores considerably. So many people will want to get "back to normal," have weeks worth of rolled-over vacation, and considerable savings to burn through. All of this should help city cores tremendously.

I also expect that urban living will recover - though it might go a bit more downmarket. People who only lived in NYC because they had a job there have to some degree left due to online work, moving to the suburbs or out of the metro. But there will always be young people fresh out of college who want to move to NYC not so much for a specific job, but because of all the possibilities the city represents. Arguably the extremely high costs over the last 20 years has pushed a lot of these folks into smaller cities, which means a decline in relative expense could make it a lot more attractive once again.

Overall, I'd expect a shift of some tenants from B/C office space into Class A, and the conversion of class B/C buildings into residential.

[iheartthed]

Originally Posted by the urban politician

Interesting, although your point seems to run counter to what the article is saying.

What will suffer more: higher cost office space in prime urban centers, or lower cost office space in secondary urban centers?

What a shitty problem to have....

I'm speaking from a bit of perspective. I worked for a company that was/is one of the largest holders of office space in Manhattan. About 6-7 years ago the company decided to reduce its footprint in Manhattan to cut costs. The company consolidated most of its NYC office space into one of the most expensive buildings in the city, but cut its total Manhattan footprint in half. The company did this because so many workers were doing hybrid work from home schedules even back then that keeping so much space was not necessary.

[SIGSEGV]

Originally Posted by austlar1

Or a cheap little fixer upper in a former office building in Midtown?

yeah, the dynamics are hard to predict here, but IMO there's no big reason for the UWS to be less desirable. People who work in Manhattan don't need to live in Manhattan and those that do live in Manhattan probably like living there. Moreover, now people who don't work in Manhattan but like places like the UWS can live there more easily if they only have to commute to shitty suburban office park once a week.


My guesses:

* CBD daily occupancy will lower (even if vacancy doesn't go up too much, since people are going to want to keep their offices even if they're only there some days a week). The people worst off from this are probably downtown eateries, (which I care about because I live downtown...) and peak commuter rail travel.

* More older offices will convert into residential. (I live in a converted office building from the early 1900's and it's perfectly nice). People who like urban living will continue to like it. The small fraction of people who live in a city but hate it will move out, but you already don't need to live in a city to work in a city.

* Some might convert into hotels instead, perhaps longer-term hotels for people who like "trying out" various cities. This blurs a bit with short-term apartment rentals...

* Exurban/rural movement will be constrained due to lack of services/infrastructure.

* I expect an influx of people from very expensive cities (NYC/SF/LA/Seattle/Boston) to less expensive cities (Philly/Chicago/Cleveland/Detroit/Baltimore/Minneapolis ) if they can work remotely, but like living in cities.

* We will need more cafes...

[Innsertnamehere]

Another impact:

Increased personal travel and recreation, and likely increased interest in vacation properties close to the city.

People's abilities to work remote means I can see people taking a "working holiday" where they rent a place for a month somewhere and work a few of the weeks from the location.

I know Toronto is already seeing this, with many people who own cottages and vacation properties travelling out on a thursday and working friday there before enjoying the property over the weekend.