New York is facing a glut of workspace as fear of COVID-19 has reduced the daily usage of office buildings to almost nothing, a devastating sign for a city already reeling from the highest unemployment rate among the largest U.S. cities.
"The economy and people's sense of their health go in lock step," said Michael Cohen, president of the tri-state area at brokerage Colliers International Group Inc . Average asking rents continued to climb to records in the first quarter when they peaked in Manhattan, and have since declined US$2.03 per square foot to US$78.01 in August.
"It's no surprise that many tenants are seeking short-term lease extensions and are hesitant to make any long-term commitments towards their office space needs," said Craig Bender, head of commercial real estate Americas at ING. The market capitalization of office REITs that invest in mostly large coastal U.S. cities is about half what it was in mid-February when concerns about a coronavirus-induced recession drove investors to dump equities across the board.