NYC Needs More Office Space For Booming Jobs Market
Each year, 2.5 million square feet of new office space opens up in New York City. Recently, for example, we’ve seen a surge in new buildings—like Hudson Yards, One World Trade Center, and One Vanderbilt, to name a few.
All of which begs the question: When will there be too much commercial real estate available in the city?
Not anytime soon.
That’s according to a consortium of commercial real estate experts, who recently discussed the state of New York’s commercial and residential real estate markets at The Real Deal’s 11th Annual New York Showcase and Forum.
“If you look at London in the last 20 years, London’s replaced 50 percent of their stock with new office space,” explained Marty Burger, CEO of Silverstein Properties. “If you go to Hong Kong, that number is 80 percent. If you go to New York that number is seven percent.”
To remain attractive to businesses in an increasingly globalized world, the real estate experts agreed that New York City needs to continue developing modern offices.
In addition to keeping pace with other cities around the globe, New York City needs more office space simply to accommodate the sizzling hot job market.
In April, the U.S. unemployment rate fell to 3.9%. Some experts predict that unemployment could fall further to 3.5%, a rate not seen in nearly 50 years. As more folks get hired, businesses will need more space.
Other factors contributing to the growth of the New York City job and commercial real estate markets include relaxed financial regulations and tax reform, according to Spencer Levy, head of research at CBRE.
Levy believes that tax reform has encouraged companies to bring overseas capital back to the United States, which bodes well for U.S. businesses and workers alike.
What, if anything, could derail the city’s growth in the near future?
Levy says that the one thing everyone is talking about is a potential stock market correction. But if such an event were to occur, he believes New York City—thanks to its diverse economy—would be able to weather the downturn much better than London and Hong Kong.
At the end of 2017, for example, finance, insurance and real estate (FIRE) companies accounted for 38% of all New York City office rentals, while technology, advertising, media and information (TAMI) companies accounted for 22% of them.
Suffice it to say the New York City commercial real estate market is thriving, with no signs of slowing down.
For more coverage of the forum, head over to The Real Deal.