The New York Commercial Crash

Since the start of the pandemic in 2020, we have seen a major shift in the way that businesses view work. Now, many businesses are supporting their employees remaining either fully online or on a hybrid system, where their time spent in the office is still limited. This shift also means that many businesses are starting to reconsider their need for large office spaces and the location that they want those spaces in.

New York, which is typically seen as THE city for business and finance jobs is now showing this change through their commercial real estate vacancy rates. In February, the vacancy rate reached a record 17.4%, and it is now being measured at 17.2% for Q2.

Another big factor behind this change is that many New York businesses are starting to move their headquarters to other cities like Miami. Companies like Spotify, Blackstone, Zumper, BlockTower Capital, and more have all been establishing large presences in Miami throughout COVID, and we can assume that they are planning to grow those presences too.

So, where is this going? Well, right now, demand for commercial space in New York is nowhere close to meeting the large supply. This means that many spaces may be lowering their prices in order to either attract new tenants or allow existing tenants to purchase more space. If this trend continues, however, we may see building owners switching to more extreme options like converting their buildings into housing or large shopping centers.