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Weekly Market Report - May 13, 2021


Demand for NYC office space rebounding

With the rollout of Covid-19 vaccinations and the relaxation of coronavirus restrictions, businesses appear to be ready to get back to the office. Demand for office space in New York City is experiencing a rebound from early pandemic levels, although still not seeing a full recovery to the strong demand before the pandemic, according to a new report from View the Space (VTS), which describes itself as “Zillow of commercial real estate.” Demand for office space in New York City was up 26% in March from a year ago, up 16% in March from February, and up 191% in the first quarter from the year-earlier period. Compared to 2018-2019, however, demand for office space in New York City was down 13%. While incremental monthly growth has slowed some as the market rebounds, time will tell if pent-up demand and bargain hunter employers will eventually push demand above elevated pre-pandemic levels.


Macy’s seeks approval for office tower above Herald Square flagship

Macy’s is pushing ahead with its plan to build an office tower above its iconic Herald Square store and is now offering to put $235 million into improving the surrounding area as it seeks approval. The company first floated the idea in 2019 of building an office tower at the flagship, releasing early renderings that showed a 1.5 million-square-foot skyscraper climbing 700 to 950 feet tall with a sky lobby. Macy’s CEO Jeff Gennette said the company is ready to move forward with its proposal, which requires a land-use review by the city, Bloomberg News reported. Macy’s said the planned overhaul of its flagship store will generate $269 million in tax revenue for the city annually and contribute $4.3 billion in economic activity each year.


New York Travel Is Down. Plenty of Hotels Are Opening Anyway

New hotels in New York City are starting to open with the summer travel season fast approaching, testing a market that has been recovering but still faces serious challenges from Covid-19. Data firm STR is projecting that 78 hotels with more than 13,000 rooms combined will open in 2021, the largest year for deliveries in recent memory. While many suffered construction delays during the pandemic and might hold back on their openings, dozens of others are still on track to open this year or early next year. Even in the best of times, launching a new hotel in the largest U.S. lodging market can be fraught. At the start of 2020, New York City’s 138,000 hotel rooms oversupplied the market, and it was starting to pressure room rates. Hotel labor costs are also among the highest in the country.


New York City Subway to Return to 24-Hour Service

New York City’s subway will return to 24-hour service on May 17 after a year of nightly shutdowns to clean stations and trains during the Covid-19 pandemic, Gov. Andrew Cuomo said Monday. State transit officials said the shutdowns, between 1 a.m. and 5 a.m. beginning last May, were needed to deep-clean trains and to direct people who are homeless to social services. At the time, average weekday ridership had declined by more than 90% to fewer than 500,000 riders. Mr. Cuomo, a Democrat, speaking at a news conference, said 24-hour service would be needed beginning May 17 to coincide with New York state lifting a 12 a.m. curfew on outdoor drinking and dining in New York City.

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