Beyond Class A: Life Sciences, A Winning Investment Strategy In New York City’s Office Market

325,000-square-foot office building

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:

  1. Repriced assets are attracting investors to properties with current weak fundamentals but strong potential.
  2. Entities such as Hyundai, NYU and Enchanté are snapping up buildings for their own use.
  3. New York City’s housing crisis has prompted developers to consider office to residential conversions, which I explored in a March 2023 Forbes article.
  4. 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.
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