What Record Office Vacancies Mean for New York City’s Economy (2024)

The News

The amount of office space available for lease in Manhattan climbed to a record high during the first four months of 2023, according to the real estate firm Colliers.

The group said that the total square footage of office space in Manhattan available for lease — roughly 94 million — has set a record. The vacancy rate of 17.4 percent, however, matched the rate from February 2022, which was the highest since Colliers started tracking the New York City office market in 2000.

The vacancy rate has grown more than 70 percent since the start of the pandemic. Nationwide, the vacancy rate is about 20 percent, according to the firm JLL.

Across Manhattan, the amount of empty work space is greater than in all of Houston and Dallas-Fort Worth combined. Manhattan neighborhoods with some of the emptiest office buildings include the Financial District in Lower Manhattan (25.6 percent vacant) and around Times Square in Midtown (19.9 percent), according to JLL.

Why It Matters: Office buildings tell the story of New York City’s economy.

Before the pandemic, office buildings drove a significant share of the city’s economy. More than 1.5 million employees worked out of New York City offices, often commuting into the city from the boroughs outside Manhattan, New Jersey and Connecticut, and spent money on food, at retail shops and on entertainment like Broadway shows. It is the largest office market by area in the world.

Private-sector workers in office buildings make about double the average annual salary than everyone else, according to the New York State Comptroller, underscoring their significance to the city’s economy.

That entire ecosystem collapsed during the early months of the pandemic as office workers shifted to remote work. Three years later, it has been slow to recover as remote work remains popular, causing companies to reduce their office footprints. That retreat has led to the high vacancy rates.