Business

After a pandemic, landlords can be crushed as the need for office space diminishes

Approximately 17.3% of Manhattan’s total office space is leasable, the highest percentage in at least 30 years. According to a recent report by real estate service firm Newmark, island solicitation rents have fallen from nearly $ 82 in early 2020 to just over $ 74 per square foot. Elsewhere, including Boston and Houston, asking rents have been almost flat for a year, but have risen slightly in Chicago.

Japanese clothing brand UNIQLO, headquartered in the Soho district of Manhattan, has recently moved to another nearby office building. This open layout features a table designed for 130 employees who only come to the office a few days a week. After the pandemic, many office workers continue to work remotely, but some, like marketing employees, hold occasional meetings in Soho.

Daisuke Tsukagoshi, Chief Executive Officer of UNIQLO USA, said: “But as we are a globally expanding Japanese company, the need for remote collaboration between many centers has always been part of our culture.”

Landlords’ stock prices are often structured as real estate investment trusts that pass almost all of their profits to investors, expanding the stock market and even some companies in other industries such as airlines and hotels. It is well below the previous high. Those hit hard by the pandemic hit new highs. Boston Properties, one of the largest office landlords, has a 29% share of its pre-pandemic highs. SL Green, New York’s main landlord, is 26% lower.

Fitch Ratings estimated that if a company allowed workers to stay home on average only one and a half days a week, the profits of office landlords would decrease by 15%. Spending three days at home can save you 30% on your income.

Senior managers at real estate companies claim they aren’t worried. They said telecommuting would soon decline once most of the country was vaccinated. What are their reasons for thinking about this? They say many business executives have told them that it is difficult to get workers to effectively collaborate and train young professionals when they are not together.

After a pandemic, landlords can be crushed as the need for office space diminishes

Source link After a pandemic, landlords can be crushed as the need for office space diminishes

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