SPOTLIGHT: TOP TREND 2023, Office Building Bust
Each worker not returning to the city center five days each week costs New York City retailers and service businesses an estimated $4,661 each year in lost revenue
EMPLOYERS SURRENDERING TO WORKERS’ DEMANDS TO WORK REMOTELY
One of the tech industry’s greatest blunders, according to OpenAI CEO Sam Altman, was allowing employees to work remotely.
Now every industry is accepting that new reality.
When office occupancy ticked up above 50 percent early this year, for the first time in three years, companies hoped they were seeing the beginning of a trend.
Apparently they weren’t.
Estimates of office occupancy rates vary. The number of workers in New York City’s office buildings on any given weekday averages 61 percent, according to the Real Estate Board of New York, a figure that mirrors findings by data service Placer.ai.
Kastle Systems, which monitors swipe card data in 10 major metro areas, pegs the average close to 50 percent.
However, both agree that the number is not budging. “This holding pattern seems to indicate a stalled recovery” of office occupancy, Placer.ai wrote in an April report.
The result: 22.7 percent of the space in New York’s office towers goes unused, double the pre-COVID amount. In San Francisco, the rate is a record 29 percent.
The tower at 60 Wall Street has stood empty for almost two years since Deutsche Bank, the building’s only tenant, decamped to cheaper, better digs uptown.
Singapore’s sovereign wealth fund and Paramount Group, the owners, are shelling out for a major upgrade in hopes of drawing new tenants.
About 58 percent of employers allow their workers to spend at least part of the work week at home, according to Scoop Technologies, which supplies workplace software to about 4,500 businesses.
Financial services firms were among the earliest to call workers back to central offices full-time. Now only 20 percent require it, down from 22 percent in February, Scoop found.
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New York City mayor Eric Adams has implored workers to return downtown, saying, “You can’t run New York City from home.”
However, workers’ desire for flexibility is stronger than ever, particularly among people in their late 20s and 30s, David Smith, research chief at real estate services firm Cushman & Wakefield, told The New York Times.