There’s a new kid on the block to report on how many employees are really back at their desks in Manhattan office buildings — and it paints a more nuanced and optimistic picture than either the widely-cited Kastle Systems Back-to-Work Barometer or the Partnership for New York City’s Return to Office Survey.
The Real Estate Board of New York’s new Analysis of Location Data, reported here for the first time, relies on estimates by Placer.ai, which calls itself the “largest provider of anonymized location intelligence data” for the US. Simply, that means it measures the movement of mobile devices in and out of office towers.
Among its provocative findings:
- Average Manhattan “visitation” rates in 2022 surpassed 60% of what they were in pre-pandemic 2019, as compared with 48% in 2021 when Omicron fears continued to keep many employees home.
- Occupancy rates exceeded 50% of pre-pandemic figures in nearly two-thirds of buildings.
- The gulf significantly widened in 2022 between occupancy at Class A and Class B buildings — with 66.3% average visitation compared with 53.6% average in Class B.
- The disparity was most pronounced in so-called Class A-plus buildings, a category that includes such state-of-the-art towers as One Bryant Park, One Vanderbilt and the new World Trade Center. Such “trophy” locations saw occupancy rise from 45.1% of 2019 levels in 2021 to 66.3% in 2022.
- The highest “visitation” rate compared with 2019 occupancy was 71% at Class A-plus buildings downtown.
REBNY’s approach differs from the Kastle survey in several important respects. It covers 250 towers of all classes with a total square footage of 180 million square feet, about one-third of Manhattan’s total inventory.
The sample includes properties owned by the largest commercial landlords such as SL Green, Vornado, Related Companies and Brookfield Properties, as well as some owner-occupied ones. Although REBNY wouldn’t cite specific locations, the latter category might include Morgan Stanley’s 1585 Broadway and Goldman Sachs’ 200 West Street.
Kastle’s 200-building sample, on the other hand, includes some suburban office parks — but almost no properties owned by Manhattan’s largest landlords. It matters because their mostly large buildings, typically leased to financial services and law firms, have higher physical occupancy than at smaller ones — which may account for Kastle’s finding of under 50% occupancy compared with in 2019.
CBRE chief research analyst Nicole La Russo, who didn’t work on the REBNY survey, said that “good research confirms what you know but can’t prove. There was a sense among owners, especially of the best assets, that recent occupancy [lower] numbers didn’t feel right.”
REBNY senior vice-president for policy Zachary Steinberg said, “The big takeaway from this is that what’s going on with office space is not monolithic. It’s a mistake and a disservice to important nuances if we treated it as such.”
Steinberg said, “The data suggests substantial variation in visitation [occupancy] between Class A-plus, Class A and Class B Buildings.”
The report’s creators emphasized that neither Kastle’s numbers nor REBNY’s reflect actual current occupancy, but rather percentages of what they were before the pandemic.
In fact, anyone who works in a Manhattan office knows that 100% occupancy prior to Covid-19 was largely a myth. CBRE’s La Russo said that her firm estimated that employees were in their offices on average 4.5 days a week.
REBNY’s pre-pandemic estimate was even lower, only around 70% based on landlords’ “anecdotal” estimates.
In the months ahead, REBNY plans to do a deeper dive into the subject with more “granular” data from Placer.ai about office returns. It will include more specifics about, for example, how low attendance is on Mondays (when it’s “touch and go” as Vornado chairman Steven Roth recently put it) and on much-dreaded, near-empty Fridays.
But the survey is already a welcome breeze of fresh air on a situation that’s prompted premature scare stories about a market collapse based on a very small handful of failures.