A recent analysis by Fitch Ratings concluded that if companies were to adopt just a day and a half of remote work per week, office landlords’ profits would fall by 15 percent. At three days, income would be slashed by 30 percent.
Jim Whelan, the president of the Real Estate Board of New York, a lobbying organization that represents major developers, said his staff has been required to work five days a week in the office since the summer. He believes buildings will fill up as cheaper commercial rents entice companies to lease in Manhattan again.
He questioned why employees would use a co-working site on their work-from-home days and brushed off the possibility of employees working remotely part of the week after the pandemic, calling it “your alternate universe.”
“Over time, we are going to work a five-day-a-week schedule,” Mr. Whelan said. “There are signs that the commercial market is picking up in the pace of leasing and in terms of how many tenants are out there looking for space.”
In the New York region, about 32 percent of workers were in the office in mid-October, according to Kastle Systems, a security company that tracks employee card swipes in office buildings. The percentage has climbed steadily since Labor Day, but is still half of what employers had predicted in a June survey by Partnership for New York City, a business advocacy group.
A bigger reckoning around office space may unfold in the coming years, as an estimated 30 percent of leases at large Manhattan buildings will expire by 2024, according to the New York State Comptroller’s Office. One major question, economists say, is whether larger companies will hold onto their office space to guarantee seats for all employees, no matter how many days a week they come in.
New York City’s office buildings are worth an estimated $172 billion and provide about 20 percent of the city’s property tax revenues. As new leasing plummeted during the pandemic, the value of the buildings dropped by $28.6 billion, the first decline in at least 20 years, according to the New York State Comptroller’s Office, costing the city more than $850 million in property taxes.