According to a new survey, only 28% of Manhattan office workers have returned to work, and fewer than half will return by January. According to a survey of 188 major employers in Manhattan conducted by the Partnership for New York City, employers anticipate that 49 percent of office workers will return on an average weekday by January. This increases from the current level of 28%, but the survey suggests that remote work will continue long after January, reducing the demand for office space in New York.
According to the poll, more than a third of firms believe their Manhattan office space demands will decrease over the next five years, and 13% believe their New York City workforce will shrink.
“Post-pandemic, remote work is here to stay,” said Kathryn Wylde, president and CEO of the Partnership for New York City, the city’s leading business group. “There is going to be a permanent relook at keeping offices and jobs in New York City.”
New York City’s office vacancy rate has reached a 30-year high of 18.6 percent. According to a recent report from New York State Comptroller Thomas DiNapoli, the city’s commercial real estate value has fallen by $28.6 billion, or 16.6 percent, reducing property tax revenue by up to $1.7 billion this fiscal year. Property taxes are New York City’s most important source of revenue, and commercial property jobs are the most important source of property taxes, so continued weakness in the office sector could be costly to the city’s budget.
While commercial real estate landlords and developers claim that leasing activity is intense and that workers will return to the office, many employers believe that the city’s high taxes, long commutes, and high costs will delay any commercial recovery.
According to the survey, only 13% of Manhattan office workers are expected to be at work five days a week by January. A third will work three days per week, 15% will work two days per week, 7% will work one day per week, and 21% will be completely remote.
Real estate (80 percent) will have the highest expected average daily attendance in January, followed by law firms (61 percent) and financial services (47 percent ). Accounting (36%) will have the lowest expected attendance in January, followed by consulting (30%) and technology (30%). (24 percent ). Wylde said that in addition to workers staying remote, the city is grappling with high-earning business owners and financial partners leaving New York for tax reasons and taking their companies and workforce with them.
“The danger is that when the high earners leave, they take operations with them,” Wylde said. “So we hear now of operations in asset management and other areas, not just individual high earners, but the real business operations moving to Texas, to Tennessee, to Florida.”
Wylde said 22% of financial firms plan to reduce their New York City-based workforce in the next five years — an alarming number, given that financial services are the economic backbone of New York City. “What’s going to happen over the next 5 to 10 years in terms of our economic and tax dependence on a population that now knows it’s highly mobile,” she said.