Delta Variant Casts a Shadow on Midtown Manhattan’s Shaky Healing


Midtown Manhattan, which had been in recession for most of the pandemic, is finally starting to show signs of life. However, this progress may be threatened by an increase in coronavirus cases resulting from the spread of the virus. Delta variant.

Remote areas conscripted During the quarantines, it was sustained by residents spending money locally as most of them remained closed at home, but the city’s central business district has weakened. Midtown, often defined as the area from 34th to 59th Street, has no significant residential population, and when office workers and tourists disappeared, very few people remained.

Hotels are closed. Office buildings and shop windows have lost their tenants. Photos of the surprisingly empty Times Square, often approximately 360,000 people per dayreported the dire situation by telegram.

pedestrian traffic and public transport Rising Midtown is showing improvement. Business in restaurants and shops has revived, and prospective owners are checking out ground-floor spaces at discounted rates.

Also, companies that postponed their new office search last year or thrived during the pandemic’s e-commerce boom are also shopping. Some firms that previously couldn’t afford Midtown are now seeing what they can do with lower rents. Those who follow the real estate industry are feeling optimistic about Midtown.

“We’re seeing strong signs of this initial recovery,” said D. Sam Chandan, dean of New York University’s Schack Real Estate Institute.

But pressure to reopen Midtown may face a setback, with increasing cases of the highly contagious Delta variant. Issues for New York’s financial recovery because commercial landlords pay about 10 percent of the city’s taxes.

Hoping to continue the momentum of reopening while protecting New Yorkers and tourists, Mayor Bill de Blasio Mandatory vaccination proof for some indoor activities last week. And an increasing number of companies with offices in New York, Facebook, Google and The Walt Disney Companyannounced that its corporate employees should be vaccinated before returning to the workplace.

Now, facing a third wave of coronavirus, some firms are calling their employees back into the office after Labor Day. put off your plans again.

The picture is further complicated by uncertainty over hybrid working arrangements. Some believe the area’s reliance on office use should be balanced with more residential use, especially as hybrid operation could mean office buildings will never be as full as pre-pandemic and streets will be less active.

What hasn’t changed is what has always made Midtown the star of the Manhattan commercial real estate fair: its central location and unmatched transportation access. In addition, buildings tend to be larger with large floor slabs that can accommodate tenants with a large number of employees.

Even before the pandemic, when more southerly areas like Flatiron and Chelsea were considered more popular, it continued to attract tenants, including tech companies like Midtown. Facebook.

But with the success of telecommuting over the past year and a half, many companies have decided to reduce their real estate footprint, allow leases to expire, or seek subcontracts.

Empty office space in Midtown It hit a record 47.4 million square feet, or 19 percent of the total area, in the second quarter of this year, according to brokerage firm Cushman & Wakefield. And according to Savills, a real estate consulting firm, the space available for sublease peaked at 11.7 million square feet in early 2021.

Savills vice president Jeffrey Peck said the square footage available for sublease fell to 11.3 million in the second quarter after some tenants faced off.

“We represent several tenants who have made room for the market – they thought they would never come back or need more,” added Mr Peck. “Since then they’ve said: ‘Don’t commission it. We are going back.”

Brokers say there has been a marked increase in prospective tenants browsing existing office space, as another sign that Midtown is starting to turn. Tours tend to be slow in June and July, when most people go on vacation, but not this year, said Paul J. Amrich, vice president of CBRE, a commercial real estate firm. He noticed a slight drop in August, but attributes it more to the holidays than Delta.

The shopping spree is not expected to cause an increase in signed leases until later this year. And the completion of development projects over the next few years will add even more space to the office inventory. But there’s already a drum sound rental contract announcements.

“It’s a little surprising that it’s happening so fast,” said David A. Falk, president of the New York tri-state district at Newmark, a commercial real estate services firm.

NS The tech industry did most of the renting in Midtown In 2020, however, financial services regained their traditional position as the region’s rental leader this year, accounting for 38 percent of all new deals, according to CBRE.

And the most rapidly depleted office space, in new or massively renovated buildings, those with generous amenities and meticulous air filtration – a selling point at a time when there are high concerns about airborne germs.

Prices for such Class A buildings are significantly higher, but vacancy rates are lower than for Class B properties, which tend to be older and lack all the benefits.

One Vanderbilt, a skyscraper that opened next to Grand Central Terminal in September, is 89 percent leased, according to owner SL Green Realty. And the company owns the building’s top floor at $322 per square foot, which if it ever materializes will likely be the most expensive office space in town.

Building owners must renovate by Fisher Brothers to remain competitive, including a $120 million update to 1345 Avenue of the Americas, Durst’s $150 million renovation of 825 Third Avenue, and Brookfield’s $400 million redevelopment of 660 Fifth Avenue. pours money into his work. Erik Horvat, the firm’s head of real estate for the Americas, said the Olayan Group spent nearly $300 million rebuilding the 550 Madison, the former AT&T headquarters on Chippendale Hill.

But interest in some Class B buildings is also increasing, especially if homeowners are willing to make deals.

GFP Real Estate, a family business, has been busy signing tenants by offering short-term leases at low rates, in the belief that it is better for a tenant to pay a lower rent than to have no tenants at all.

“This is the hardest job I’ve ever had, I’ve been making so many deals,” said Jeffrey Gural, president and director of GFP.

Negotiations attract firms that previously couldn’t afford Midtown.

The Urban Future Center, a nonprofit that monitors the city’s economy, used to rent space in Lower Manhattan, but is now shopping for space in Midtown.

“Before the pandemic, our organization wouldn’t really have considered renting in Midtown,” said executive director Jonathan Bowles. “We have so many options now.”

There are also many options for retailers. Demanding rents have dropped and landlords are waving incentives. Some design deals to take a percentage of a store’s earnings rather than a fixed monthly rate.

Food and beverage suppliers, in particular, are on the prowl, chasing the old restaurant space that is already equipped with kitchen appliances, said Steven Soutendijk, executive director of Cushman & Wakefield. Amid the rush for deals, La Casa Del Mofongo signed a lease on a 15,000-square-foot site near Herald Square for its Latin restaurant and nightclub.

Rockefeller Center, where a flagship Lego store opened in June, has managed to attract tenants. Kaba Ticaret record store.

Peter Riguardi, head of real estate broker JLL’s New York area, said it could still be two or three years before there is a full turnaround in the retail market.

Some believe that in the long run, Midtown will need to diversify as Lower Manhattan has done in the past few decades, certainly making the transition from a 9-to-5 financial district to a 24/7 neighborhood.

“I don’t count Midtown yet,” said Mr. Bowles.



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