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Manhattan’s office market continues to slump. In the third quarter, deals were inked for 4.81 million square feet of office space, just half of what was leased during the same time last year. That brought the year’s total to 14.81 million square feet, also down 50 percent from the same period in 2019, according to Colliers International’s quarterly market report. If the pace of leasing continues for the rest of the year, leasing volume in 2020 would be the lowest this century, according to the report. To put the decline into perspective, after the dot-com bubble burst, leasing activity dropped by 14 percent between 2000 and 2001. During the Great Recession, from 2007 and 2008, it fell by 18 percent.
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Short-term office provider IWG is looking to close at least a fifth of its work centers in New York City as the parent company prepares to throw its Regus subsidiary into bankruptcy in the U.K. IWG earlier this year said it plans to close 4 percent of its global portfolio as a result of the pandemic, but didn’t give specifics on how that would impact individual markets. It looks like it’s closing a higher percentage in New York City, where the short-term office market has taken a big hit. A spokesperson for U.K.-based IWG, headed by CEO Mark Dixon, declined to comment on the New York City closings, but sent a statement saying the pandemic “is a black swan event and it has severely impacted our business and presented us with unforeseen challenges.”
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Manhattan saw 2.5 million square feet of sublease space added to the market in the third quarter of this year, bringing the total to 16.1 million square feet. It now accounts for 26.7 percent of all available space. The commercial observer reported that another 1.1 million square feet available for sublease will be added to the borough in the next several weeks, mainly due to coworking companies giving back offices. This was only reinforced with IWG looking to close 20% of their locations. “This is really the first quarter we’re really seeing the impact of sublease space,” an expert said, adding that sublease space tends to be 10 to 15 percent cheaper than direct deals. However, those discounts might be slightly less now since some of the new sublease space coming on the market is in new construction and therefore carries a higher price tag.
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Governor Andrew M. Cuomo updated New Yorkers on the state's progress during the ongoing COVID-19 pandemic. In the top 20 ZIP codes in areas that have seen recent outbreaks - Brooklyn and Queens and Rockland and Orange Counties - 5,311 tests were conducted, yielding 271 positives or a 5.1 percent positivity rate. In the remainder of the state, 102,935 tests were conducted yielding 1,089 positives or a 1.05 percent positivity rate. "We've seen time and time again throughout this pandemic—mass gatherings become a cluster, which can spread and become an outbreak if we don't stop the cluster early," Governor Cuomo said. Areas in hot spot communities, predominantly in Brooklyn, Queens, Rockland and Orange Counties, will continue to be subject of focused testing efforts including access to rapid testing machines.