REBNY’s new return-to-office sensor paints a vivid view of trophy towers

There’s a newcomer on the block who reports how many employees actually returned for their jobs in office buildings in Manhattan, and it paints a more detailed and optimistic picture than the much-cited Kastle Systems Back-to-Work barometer or partnership. for a return study to the New York City office.

The New York Real Estate Board’s new location data analysis, presented here for the first time, relies on estimates from Placer.ai, which describes itself as the “largest provider of anonymous location data” in the US. Simply put, this means that it measures the movement of mobile devices in and out of office towers.

Among his provocative findings:

• Manhattan’s average “visit” rates in 2022 are over 60% of what they were in pre-pandemic 2019, up from 48% in 2021, when Omicron concerns continued to keep many employees at home.

• Occupancy rates exceeded 50% of pre-pandemic levels in almost two-thirds of the buildings.

• In 2022, the occupancy gap between Grade A and Grade B buildings widened significantly, with an average occupancy rate of 66.3% compared to an average of 53.6% in Grade B.

• The discrepancy was most notable in so-called A-plus buildings, a category that includes modern towers such as One Bryant Park, One Vanderbilt and the new World Trade Center. In these “trophy” places, occupancy increased from 45.1% of the 2019 level in 2021 to 66.3% in 2022.

• The highest rate of “visits” compared to occupancy in 2019 was 71% in A-plus class buildings in the city centre.

The REBNY approach differs from the Kastle survey in several important ways. It covers 250 towers of all classes with a total area of ​​180 million square feet, about one-third of Manhattan’s total inventory.

The sample includes properties owned by major commercial landlords such as SL Green, Vornado, Related Companies, and Brookfield Properties, as well as some owner-occupied properties. Although REBNY does not name specific locations, the latter category may include 1585 Broadway Morgan Stanley and 200 West Street Goldman Sachs.

On the other hand, Kastle’s sample of 200 buildings includes several suburban office parks, but has almost no property owned by Manhattan’s largest homeowners. This is important because their mostly large buildings, typically rented out to financial services and law firms, have higher physical occupancy than smaller ones, which could explain Castle’s conclusion of less than 50% occupancy compared to 2019.

CBRE chief analyst Nicole La Russo, who did not participate in the REBNY poll, said that “good research confirms what you know but cannot prove. Among the owners, especially the best assets, there was a feeling that the recent occupancy [lower] the numbers didn’t seem right.”

REBNY senior vice president of policy Zachary Steinberg said, “The main takeaway from this is that what happens to office space is not monolithic. It would be a mistake and a disservice to important nuances if we treated it like that.”

Steinberg said: “The data show significant differences in attendance. [occupancy] between class A-plus, class A and class B buildings.

The report’s creators stressed that neither Kastle’s nor REBNY’s numbers represent actual current occupancy rates, but rather percentages of what it was before the pandemic.

In fact, anyone who works in a Manhattan office knows that 100 percent occupancy before Covid-19 was pretty much a myth. CBRE’s La Russo said her firm estimates that employees spend an average of 4.5 days a week in their offices.

REBNY’s pre-pandemic estimate was even lower, at only about 70%, based on “anecdotal” homeowner estimates.

REBNY plans to dive deeper into the topic in the coming months with more “detailed” data from Placer.ai on the return to the office. It will include more details on, for example, how low attendance is on Mondays (when it’s “click and go,” as Vornado chairman Steven Roth recently put it) and on very scary, almost empty Fridays.

But the review is already a welcome breath of fresh air in a situation that has prompted premature horror stories of a market crash based on a very small handful of failures.