New York’s financial district faces office glut | WORLD

Empty office blocks in the financial district helped push the supply of available space in Manhattan to another record.

The office vacancy rate in New York reached 19% in the first quarter, the highest in data going back to the year 2000, according to a report on Wednesday from Savills Research.

In the financial district, more than a quarter of offices were available for rent, compared to just 17% a year ago. That jump was due in large part to the refurbishment of a couple of large buildings, including Deutsche Bank’s former headquarters at 60 Wall Street, Savills said.

“Tenants are focused on new premier spaces,” said Sara Dreyer, Savills senior vice president of research and data services. “There could be some vacant spaces left as tenants move to higher quality space.”

Manhattan homeowners have been struggling with a glut of office space during the pandemic, as workers have been slow to return to their workplaces and businesses reassess their real estate needs.

Businesses looking for offices have been gravitating toward newer buildings, which helped push median rents asked 1.7% higher to $77.34 per square foot in the first quarter. Still, landlords are including concessions to get deals, offering reductions and improvement allowances to tenants.

Median rent in the Financial District was $57.60 per square foot, compared to $83.70 in Midtown, according to Savills.

While the vacancy rate will continue to rise in the short term, Dreyer said the market could start to recover as early as 2023.