Over the last decade, the NYC office sector experienced a level of growth that more than doubled commercial real estate values and associated property taxes. A press release issued by the New York State Comptroller attributes this expansion to robust job growth, noting “New York City's office sector reached a total of 1.6 million jobs in 2019, the highest level on record.” Then, of course, came COVID-19.
Where the Market Is Now?
Despite extensive growth over the last ten years, the State Comptroller's final assessment for FY 2022 shows a property tax loss totaling more than $850 million. This alarming decline in NY real estate value comes as the office sector continues to struggle through new COVID-19 variants and economic uncertainties on a global scale. By June of 2020, new leasing in Manhattan had fallen by 75% compared to the year before.
That said, short-term growth shows at least some signs of stabilizing as office sector tenants are increasingly willing to enter into multi-year leases through 2023. Additionally, building owners have adapted to new office space priorities, like ventilation and social distancing needs. Even with new pandemic curveballs, most employers and commercial tenants now have protection strategies in place.
When Will the NY Office Sector Market Recover?
The pandemic has been a series of frustrating ups and downs. At times, it's looked like office employment as we knew it was over for good, and at other times, we seemed on the verge of returning to normalcy. If we've learned anything, it's that we need to stay flexible. The State Comptroller's Office is optimistic about the long-term NY office sector market but cautions NYC “to deliberate carefully over its choices to influence office employment and space, and to ensure that policy decisions will mitigate negative impacts on tax revenue and the economy.”
Speak to an Experienced NY Real Estate Attorney
If you're faced with tough decisions concerning your NY commercial real estate assets, talk to an experienced attorney at The Offices of Melvin Monachan. Contact us online today or call us at (347) 389-1682.