Late last week, SL Green held its Q3 Earnings Call last week and shed some light on the organization's posture in the current environment and its expectations for Q4 and beyond. For those interested, you can read a full breakdown of the call here.
While the overall sentiment is optimistic about the city's progress and eventual return to normalcy, one indisputable point is that we are clearly in a tenant’s market.
Amongst the main takeaways:
Rental rates are down 10%+ (net-effective rents likely significantly more so)
Rent collections remain strong in the mid-90% range
15-20% of employees within their portfolio have been traveling into the office
SLG acknowledged that the city still has long way to go before office demand returns
Overall, it’s unlikely that the office market will stabilize in the short-term - even without a second wave, the current market has not rebounded quickly enough to patch over the effects of the cataclysmic shutdown in Q2. For businesses approaching a lease expiration or facing pressure to make a decision with regard to office space, the best advice I can give is to wait for clarity in your business’ needs. The great deals that exist today will likely last well into 2021; what’s most important is being able to identify an office space arrangement that is appropriate for your business in a post-covid world.