Encouraging Developments (
A message from Ben Blumenthal) -
Along with some unseasonably warm weather, November has brought forth a number of encouraging developments for the return of New York City: the election of a new Mayor (who many real estate folks are excited about), the return of tourists as a result of the lifted travel ban, and a scorching-hot residential market that has made a complete 180 in less than 12 months.
The positive momentum has carried over into the office market, where daily office occupancy rates have picked up significantly from ~30% in September, including in many Class-A buildings, where daily occupancy rates now sits between 40-50%.
What does this tell us?
That demand is strongest for quality office space in great buildings with amenities that entice workers to return to the office. On a related note, Boston Properties recently reported that the number of people coming into their office buildings daily is ~50%, compared to 65% pre-pandemic. This figure lends some perspective, as the benchmark daily occupancy was only ⅔ employees - so in some ways, BXP (in particular) is pretty close to normalcy.
To further illustrate the market's recent pricing increase, we've seen 2 similar spaces leased over the course of 10 months, with a 30% net-effective rent increase from January ‘21 to Oct ‘21.
(You can read more about it on my post here).
These data points are confirmed by the increase we are seeing internally in both transaction volume and conversations with executives looking to get back into a Midtown office because of its time-tested necessity when it comes to attracting great talent and growing a business.
Wishing you all a happy Thanksgiving!
Noah & Co.
For the rest of our November 2021 Newsletter, click here.