New York City hasn’t had this much empty office space in three decades

Vacant office space in New York City is the highest in nearly three decades and will likely hit “unprecedented levels” in the coming months.

As many companies continue to work from home, data from global real estate services firm Cushman & Wakefield shows that the office vacancy rate in Manhattan reached 16.3% in the first quarter of 2021 — the highest since 1994. That’s up from 11.3% a year ago.

The report — assessing office space in Manhattan — noted that office space leased since last year has also declined.

Cushman & Wakefield expects vacancies to continue to increase to “unprecedented levels in the coming months.” However, the report also notes that rising vacancies will drive asking rents down “substantially.”

In fact, Manhattan’s overall asking price for rents has declined for the past two consecutive quarters, falling to the lowest price per square foot in three years. But some analysts think that lower rents are not just due to demand, and that costs depend on the situation.

“Landlords have adjusted their expectations and are already being much more aggressive than they were before COVID,” said Michael Cohen, president of the tri-state region at Colliers International. “But their specific reactions depend on their individual circumstances. For example, developers of newer office buildings are more likely wait to make deals if they don’t want to lower their rents further.”