On the surface, the news from the New York City office sector may look grim: vacancy rates nearing 20%, occupancy rates stubbornly stuck at around 50%, interest rates rising, values dropping, anemic investment sales activity and owners giving keys back to lenders.
Fortunately, that isn’t the full story. As I discussed in my previous Forbes article, landlords are holding onto Class A, well- tenanted buildings even as they let go of others. Additionally, four other strategies show long-term health for the office sector:
- Repriced assets are attracting investors to properties with current weak fundamentals but strong potential.
- Entities such as Hyundai, NYU and Enchanté are snapping up buildings for their own use.
- New York City’s housing crisis has prompted developers to consider office to residential conversions, which I explored in a March 2023 Forbes article.
- Also, while office finds its footing, there is another workplace and innovation asset class that continues to see strong demand citywide: life sciences. In fact, this demand is leading a number of owners to explore activity in this appreciating sector.