Offices Reopen, but Downtowns Are Still Quiet

Leasing inquiries are on the rise as cities lift lockdowns and companies attempt an uncertain return to the workplace.

Employees are trickling back to the office after a monthslong experiment in remote work, but office towers in key urban centers remain largely empty as a growing number of companies postpone return dates. Access control data from Kastle Systems indicates that office occupancy averaged 22.3 percent across 10 cities as of July 31—still a fraction of pre-pandemic levels.

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In midtown Manhattan, around 10 percent of office space is believed to be in use, even after New York State allowed offices to reopen at up to 50 percent of maximum occupancy starting June 22. SquareFoot, a startup that helps companies find office space, is among the firms embarking on a tentative return to the workplace. The company reopened its space at 115 W. 30th St. on July 13, allowing employees to come to the office on an opt-in basis.


Commercial real estate technology firm SquareFoot is among the companies navigating a tentative return to the workplace in Manhattan, but occupancy restrictions and pandemic fears are keeping the borough’s office towers mostly vacant. Image courtesy of SquareFoot

In accordance with social distancing guidelines under Phase 2 of the state’s reopening plan, a space that formerly housed 59 employees daily can now host a maximum of 27 people at a time. SquareFoot is preparing an algorithmic rotation system for the fall, when it anticipates larger numbers of employees will want to return.

Jonathan Wasserstrum, SquareFoot’s CEO & co-founder, observed that office space inquiries on SquareFoot’s platform began to pick up in May after a stagnant March and April, but tours were impossible until Phase 2 began. “By June, a lot of people were like, okay, I’m ready to go look at space,” he said.

Office leasing in Manhattan plummeted to its lowest quarterly total in more than 15 years during the second quarter, according to Newmark Knight Frank, but there are signs that demand is coming back. “Our top of the funnel—people starting their space search—is at 75 percent of where it was pre-COVID-19 levels,” Wasserstrum said.

Sector Insights rotates among office/medical office, industrial, retail, multifamily, self storage and hotel/hospitality.

Read the September 2020 issue of CPE.

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