Delivered every Monday by 10 a.m., New York Real Estate & Infrastructure is your guide to the week’s top real estate news and policy in Albany and around the Empire State.
Delivered every Monday by 10 a.m., New York Real Estate & Infrastructure is your guide to the week’s top real estate news and policy in Albany and around the Empire State.
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By JANAKI CHADHA and DANIELLE MUOIO DUNN
Offices leasing is not recovering from the pandemic as quickly as hotels and retail. | Spencer Platt/Getty Images
Visitors are returning to Lower Manhattan, boosting area hotels and retail — but more than two years into the pandemic, office vacancies remain high and asking rents are inching down in one of the city’s major business districts.
A new report from the Alliance for Downtown New York noted office leasing activity in the area remained 45 percent below the five-year quarterly average during the second quarter of 2022, and saw a 31-percent decline from the first quarter.
More than 20 percent of office space in Lower Manhattan was vacant, the report said — citing data from Cushman & Wakefield, and the second quarter marked a record in which the overall vacancy rates for all three Manhattan office markets, including Lower Manhattan, Midtown and Midtown South, were all above the 20 percent threshold. Average asking rents in Lower Manhattan, at $56.80 per square foot, were also down 5.5 percent year-over-year.
“Office leasing activity was certainly slower than expected this past quarter and it's too soon to say if it was a temporary setback or if it reflects a new baseline in the evolving landscape," Jessica Lappin, president of the alliance, said in a statement. "We have however seen continued demand on the residential front and a response from the real estate community to kickstart conversions on at least five properties within the district to meet that demand.”
The report cited properties slated for residential conversions or those that may have some potential to become apartments, including a 30-story property at 55 Broad St. that is set to become a residential building with 571 market-rate units. And 40 Fulton Street, an office property put up for sale by Vornado, “is speculated to be converted to residential use, given its smaller floor plates and good light access,” while another office building, 25 Water Street, also “appears poised for residential conversion,” the report said.
While office occupancy has ticked up across the city this year, it’s clear that remote work will endure in some form — and many companies are making decisions about their office needs with that reality in mind.
The report noted hotel occupancy has “improved markedly” over the last year, with Lower Manhattan seeing occupancy at 77 percent during the second quarter. That's just 11 percent below the same period in 2019. Retail openings additionally outpaced 2019 levels.
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NUMBER OF THE DAY: 8.5 percent, the amount New York City rents surged in the first half of the year.
CLARIFICATION: We updated our story on the Public Authorities Control Board vote for Penn Station to make it clear that the board approved the state’s controversial financing plan for the project, allowing the state to apply for federal funding and move forward on the initiative. But many steps still remain on the local and federal level before anything gets built.
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CELL SERVICE COMING TO SUBWAY TUNNELS, IN A DECADE — The New York Times’ Ana Ley: “New York City’s subway tunnels, among just a handful of places in the sprawling metropolis where cellphone service remains out of reach, will be wired to connect riders traveling underground, according to the Metropolitan Transportation Authority. The authority, which operates the city’s subway system, said it would take 10 years to complete the task because of the project’s scale. Crews will install infrastructure along 418 miles of underground track — roughly the distance from New York City to Cleveland — without additional service interruptions.
The $600 million project will be paid for and built by Transit Wireless, a New York-based communications infrastructure company, which already provides access to cellphone and Wi-Fi service in all of the city’s 281 underground subway stations.”
EVICTIONS ON THE RISE — City Limits’ David Brand: “The number of legal evictions in New York City grew each month in the first half of 2022 as rents skyrocketed and pandemic tenant protections began to diminish, city data shows. So far this year, city marshals have executed at least 1,527 residential evictions, according to statistics maintained by the Department of Investigation (DOI). The true number of legal evictions is likely higher because DOI updates its database only after a marshal reports an eviction, which can take days or weeks.
A state ban on most evictions ended Jan. 15, but the expiration did not initiate a sudden spike in legal removals, with various requirements prolonging the process so long as tenants respond to notices and visit Housing Court.”
CITY LAUNCHES 24/7 SPEED CAMERAS — Staten Island Advance’s Eric Bascome: “Starting Monday, the 2,000-plus speed cameras installed across New York City will start ticketing motorists 24 hours a day, seven days a week, 365 days a year. The city’s school zone speed camera program has come a long way since it was first enacted in 2013 and implemented in 2014, when only 20 mobile camera units were ticketing strictly during weekday school hours.”
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CITY FAILS TO SAVE BELOVED BED-STUY MANSION — Brownstoner’s Anna Bradley-Smith: “The clock has run out on efforts to save Bed Stuy’s Jacob Dangler mansion: The New York City Department of Buildings issued a permit for full demolition of the building Tuesday. Video posted on Instagram by neighbors Wednesday shows demolition of the 1890s structure has started. Just over a week ago, it seemed likely Landmarks would step in and save the French Gothic Revival house at 441 Willoughby Avenue at the last minute. LPC held a public hearing to consider landmarking the building on Tuesday, July 12. At the hearing, attendees overwhelmingly supported landmarking the mansion.”
TUMI DOWNSIZES OFFICE SPACE — Commercial Observer’s Celia Young: “Tumi will check its luxury luggage at slightly smaller digs in NoMad early next year. The luggage brand zipped up a 10-year deal to relocate its showroom and offices from roughly 25,000 square feet at 261 Fifth Avenue to 20,000 square feet at 16 East 34th Street, Commercial Observer has learned. Asking rent at the 34th Street location was $60 per square foot, according to landlord broker Newmark.”
INDUSTRY MOVES — Raju Mann, the former Director of Land Use at the New York City Council, has joined the global design and engineering firm Arup as an Associate Principal and City Planning Leader in the firm’s New York office.
— New York and Singapore tied for the highest rent increase in the world for the first half of 2022.
— Mayor Eric Adams joined advocates for people experiencing homelessness for a “sleep out” to help raise awareness of the growing crisis.
— Some cities are offering cash to employees to not drive to work, helping increase public transportation use.
— Garbage enclosures set up in Times Square to keep trash bags out of sight have turned into overflowing eyesores.