After Pandemic, Shrinking Want for Workplace Area Might Crush Landlords


Around 17.3 percent of all office space in Manhattan is available for rent, the highest proportion in at least three decades. According to a recent report from real estate services company Newmark, asking rents on the island have fallen from nearly $ 82 at the beginning of 2020 to just over $ 74 per square foot. In other countries, asking rents have remained largely unchanged for a year, including Boston and Houston, but rose slightly in Chicago.

Japanese clothing brand Uniqlo, headquartered in the United States in the SoHo neighborhood of Manhattan, recently moved to another office building nearby, an open layout with tables for 130 employees who come to the office only a few days a week. Many of his office workers will continue to work remotely after the pandemic, while some employees, like those in the marketing department, hold occasional meetings in SoHo.

“It was challenging as a leader because meeting people face to face is so important,” said Daisuke Tsukagoshi, general manager of Uniqlo USA. “However, being a Japanese company with global reach, the need for remote collaboration between many centers has always been part of our culture.”

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April 8, 2021, 9:35 a.m. ET

The share prices of major landlords, often structured as real estate mutual funds and giving almost all of their profits on to investors, are well below their previous highs, even than the broader stock market and some companies in other industries such as airlines and hotels that have been hard hit by the pandemic , have reached new highs. Boston Properties, one of the largest office rental companies, is down 29 percent from the prepandemic high. SL Green, a major New York rental company, is 26 percent lower.

Fitch Ratings estimated that office landlords’ profits would fall 15 percent if companies allowed workers to be home an average of just one and a half days a week. Three days at home could cut income by 30 percent.

Real estate executives say they are not concerned. They said that work from home will quickly fade away once most of the country is vaccinated. Your reasons to think so? They say that many leaders have told them that it is difficult to get employees to work together effectively or to train young professionals when they are not together.