FiDi and Tribeca Among Districts with Highest Office Vacancies
The office-pocalypse unleashed by the remote-work trend that became entrenched during the Covid pandemic is especially pronounced in multiple Lower Manhattan neighborhoods, according to a new analysis from international real estate consulting services firm Savills.
The report, which gauges metrics from the second quarter of this year, documents that 29.3 percent of office space in the Financial District is currently vacant, making it the most distressed district in Manhattan. Tribeca is in third place, with 24.9 percent of offices currently empty, while the World Trade Center and Brookfield Place (which are treated as a single catchment by Savills) are experiencing a 20.1 percent vacancy rate, making that market the sixth most beleaguered in Manhattan. These meausures have steadily worsened from the same period one year ago, according to Savills, when vacant rates in the Financial District, Tribeca, and the World Trade Center/Brookfield were 26.8 percent, 19.7 percent, and 18.8 percent, respectively.
Asking rents for office space in these same neighborhoods are also lagging Manhattan prices as a whole, the same report indicates. The Financial District currently commands $57.62 per square foot, while Tribeca fetches $65.30, and World Trade Center/Brookfield is getting $63.08.
From the second quarter of 2022, these prices have risen slightly for the Financial District (from $57.51) and the World Trade Center/Brookfield (from $63.52), but declined sharply in Tribeca (from $81.67). During the same interval, asking prices for office space in Manhattan as a whole have risen incrementally, from $77.16 in the spring of 2022 to $77.61 in the second quarter of this year.
If local office space remains chronically vacant for a prolonged period (and few observers are predicting a near-term recovery), this may increase pressure to convert erstwhile office towers into residential buildings. Multiple projects of this kind are already underway in Lower Manhattan, most notably at 25 Water Street (where 1,300 apartments will be created), 55 Broad Street (571 apartments), and 160 Water Street (586 apartments).