Only 28% of Manhattan workers have returned to their desks
Only 28% of office workers in Manhattan have returned to their desks, and less than half will be back by January, according to a new survey.
Employers expect 49% of office workers to be back on average weekdays by January, according to a survey of 188 large Manhattan employers by the New York City Partnership. This is up from the current level of 28%, yet the survey indicates that remote work will continue long after January and reduce demand for office space in New York.
According to the survey, more than a third of employers expect their needs for office space in Manhattan will decrease over the next five years, and 13% expect a decrease in the New York City workforce.
“Pandemic remote work is here to stay,” said Catherine Wild, president and CEO of the New York City Partnership, the city’s leading business group. “There will be permanent change in offices and jobs in New York City.”
Office vacancy rates in New York City are now at a 30-year high of 18.6%. The value of commercial real estate in the city decreased by $28.6 billion, or 16.6%, reducing property tax revenue by as much as $1.7 billion this fiscal year, according to a recent report from New York State Comptroller Thomas Dinnpoli. Property taxes are the largest source of revenue for New York City, and commercial property is the largest source of property taxes, so continued weakness in the office sector could prove costly to the city’s budget.
While commercial landlords and developers say rental activity is robust and workers will return to the office, many employers say high city taxes, long commutes and higher costs could prolong any recovery in the commercial sector.
By January, only 13% of office workers in Manhattan are expected to be at the workplace five days a week, according to the survey. The third will be on three days a week, 15% will be on two days a week, 7% will be on one day a week, and 21% will be completely away.
The industry with the highest average daily attendance expected in January will be real estate (80%), followed by law firms (61%) and financial services (47%). The industries with the lowest expected attendance in January will be accounting (36%), consulting (30%) and technology (24%).
In addition to workers staying away, Wilde said, the city is grappling with high-income business owners and financial partners who are leaving New York for tax reasons and taking their businesses and workforce with them.
“The danger is that when the high earners leave, they run operations with them,” Wilde said. “So we’re now hearing about operations in asset management and other areas, not just high-income individuals, but real business operations moving to Texas, to Tennessee, to Florida.”
Wild said that 22% of financial firms plan to reduce their workforce in New York City in the next five years — an alarming number, given that financial services are the economic backbone of New York City.
“What will happen over the next five to 10 years in terms of our economic and tax dependence on populations that now know they are highly mobile,” she said.