A recent Fitch Ratings analysis concluded that if companies adopted just one and a half days of remote work per week, office landlord profits would fall by 15 percent. After three days, income would have fallen by 30 percent.
Jim Whelan, the chairman of the New York Real Estate Board, a lobbying organization that represents major developers, said his staff has been forced to work in the office five days a week since the summer. He believes buildings will fill up as cheaper commercial rent drives companies to rent again in Manhattan.
He questioned why employees would use a co-working site on their work-from-home days and brushed aside the possibility of employees working remotely for part of the week after the pandemic, calling it “your alternate universe.”
“Over time, we’ll be working on a five-day-a-week schedule,” said Mr. whelan. “There are signs that the commercial market is picking up in terms of the pace of letting and in terms of how many tenants are looking for space.”
In the New York area, about 32 percent of employees were in the office by mid-October, according to Kastle Systems, a security company that tracks employee card swipes in office buildings. The percentage has risen 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.
According to the New York State Comptroller’s Office, a larger settlement around office space will occur in the coming years, as an estimated 30 percent of leases on major buildings in Manhattan expire by 2024. A key question, economists say, is whether larger companies will keep their office space to ensure seating for all employees, no matter how many days a week they come in.
New York City’s office buildings are estimated to be worth $172 billion and provide about 20 percent of the city’s revenue for property taxes. When new rentals plummeted during the pandemic, the value of the buildings fell by $28.6 billion, the first drop in at least 20 years, according to the New York State Comptroller’s Office, and cost the city more than $850 million in property taxes. .