If New York, with 330000 financial workers, becomes an “empty city”, will commercial real estate be good in 2022?
Just after the New Year holiday, the number of newly reported covid-19 cases in the United States exceeded 1 million in a single day, and Wall Street banks had to stop the plan to let employees return to the office. In the past week, JPMorgan Chase, Morgan Stanley, Goldman Sachs Group, Wells Fargo Bank and Jeffrey group have informed their employees to continue working from home.
New York Mayor Eric Adams, who just took office on Saturday, called on large employers to resume face-to-face offline work as soon as possible, because restaurants, hotels and other enterprises in the city need the support of these financial employees. “You can’t make New York City work at home,” Adams said. “We have to involve everyone in our financial ecosystem.”.
Although employees are temporarily unable to return to the office, the commercial real estate industry is still very optimistic about 2022.
The National Association of Realtors (NAR) predicted in December 2021 that more and more workers will return to the office even under the Wuxi Online Offline Communication Information Technology Co.Ltd(300959) mixed office system. The office market of commercial real estate may see a further increase in net absorption in 2022.
the wall bank office is empty again
In 2021, Wall Street companies such as JPMorgan Chase and Goldman Sachs have been actively encouraging employees to return to the office. Jamie Dimon, CEO of JPMorgan Chase and David Solomon, CEO of Goldman Sachs, believe that this is the best way to maintain the corporate culture and train new employees. During the epidemic, many traders and senior managers of their company returned to the office regularly.
However, the plan to return to the office has been repeatedly frustrated by the repeated epidemic. James Gorman, chief executive of Morgan Stanley, recently admitted that he underestimated the duration of the epidemic. Gorman predicted last summer that people could return to the office in September of that year.
Morgan Stanley said that before the emergence of the Omicron strain, about 65% of employees in the New York office appeared. According to a person familiar with the situation, this figure fell sharply during the holidays.
Many companies have adopted increasingly stringent epidemic prevention standards. On January 2, Goldman Sachs informed employees in an email that employees could stay at home and work at least until January 18. Since January 10, the frequency of virus detection in the detection center for employees entering the office has increased from once a week to twice a week. The company also requires personnel entering its office building to be vaccinated. From February 1, all qualified employees are required to receive the third vaccination. During December, the company also cancelled some employee holiday parties.
At the end of 2021, Citigroup informed its employees in more than 30 offices in the United States to work from home as much as possible in the weeks before the new year. Wells Fargo delayed the return of employees to the office across the United States, and New York employees of Morgan Stanley and Deutsche Bank were also offered the option of working remotely.
JPMorgan also said that in the first two weeks of 2022, American employees can flexibly choose to work from home, but they hope to return to the office by February 1 at the latest. Last week, Bank of America also encouraged American employees to work from home this week and will provide on-site third vaccination service for American employees this month.
commercial real estate thawed and frozen?
According to US media reports, as some new buildings enter the commercial real estate market in New York, the supply continues to increase. Some top banks are reassessing their policies to get employees back to the office as soon as possible. But despite a rebound in demand in Manhattan’s office market, the Omicron strain may also delay further progress.
According to a report released this week by Savills research, a real estate service provider, the leased area jumped to 9.3 million square feet (about 864000 square meters) in the fourth quarter of 2021, the highest in the past two years after the outbreak, an increase of 21% over the previous quarter. The brokerage firm said that most of the demand comes from the signing of new agreements by enterprises, which indicates that tenants have long-term plans for future office work.
Savills said in the report: “the occupancy rate has dropped slightly in recent weeks. The company is considering delaying the plan to return to the office. The new Omicron strain has brought additional uncertainty to the future development.”
According to the report, the average rent in New York City rose for the first time in two years, up 1.3% from the third quarter to $76.03 per square foot, but still 9.4% lower than the pre pandemic level.
CBRE, a commercial real estate services and investment company, said that although the Omicron virus will affect the time of large-scale return to the office, fiscal and monetary policies still support economic growth.
“An obvious trend in the second half of 2022 will be the return of the bustling downtown. With the recovery of business and leisure travel, we will see a sharp recovery in the hotel and catering industry in major cities, which in turn will stimulate people to return to the office and promote the overall recovery of life in the downtown.” CBRE said, “after the downturn in 2021, the recovery pace of (office building industry) will accelerate. As mixed work becomes the new normal, office properties with facilities to enhance employee collaboration and health will get the best benefits.”
(First Finance)
