The COVID-driven remote work explosion threatens the future of the world’s major business centers in New York, where a significant proportion of workers are expected to never return to offices and where large companies are already opting to downsize or abandon their physical spaces.
A year into the pandemic, only 10% of Manhattan office workers have returned to their regular jobs, according to a survey released this month by the Partnership for New York City, a coalition of the largest New York City businesses.
The surveyed companies expect that by September — when most citizens will be fully vaccinated — about 45% of staff will be back in the office.
Meanwhile, large New York employers expect just over half of their workforces continue remote working in the future, at least for part of their day.
‘Remote work’: A change in the way we work
Many large companies are betting on this work from work revolution and are taking steps to adapt.
This is the case of JPMorgan Chase, the largest bank in the United States, which employs more than 20,000 people in its New York offices. Although it has not been officially confirmed, according to The New York Times, the bank plans to implement a rotation model in which employees sometimes work in the office and sometimes stay home for remote work.
For instance, JPMorgan Chase has put on the market a space of about 65,000 square meters that it rents in the financial district of lower Manhattan, the largest space offered for subleases in the entire city.
And it is not the only one, as according to The Wall Street Journal other companies such as Salesforce or PricewaterhouseCoopers are also trying to place offices they have leased.
Leaving these spaces is not always easy, given that leases are typically for ten years or more, but the trend is already being felt very clearly in the office stock — with an 80% increase in available sublease space in the financial district — and in prices, which have fallen by double digits nationally.
In total, there is more than 9 million square feet of office space on the market in Manhattan right now, a 37% increase over last year and more than all the office space in Los Angeles, Atlanta and Dallas combined, according to The New York Times.
Farewell to the office
The decline of the office as the center of New York City’s economic activity will not only affect Manhattan’s urban landscape but poses a serious threat to the future of the city as a whole.
City coffers, already hard hit by the pandemic, stand to lose as much as $2.5 billion in property tax revenue in the next fiscal year, one of New York City Hall’s major sources of funding, which relies heavily on commercial real estate.
This is the estimate of the city authorities, who want to prevent this from becoming a reality by encouraging a return to office space.
To set an example, Mayor Bill de Blasio has ordered all City Hall employees to return to their jobs as of May 3, in a measure that will directly affect some 80,000 people who had been ordered to stay home for remote work since the pandemic broke out.
According to De Blasio, this is a “powerful message” about reopening the Big Apple and its “full recovery.”
“Businesses are seeing that it’s time to come back,” the mayor explained at a press conference, highlighting progress on covid-19 vaccinations as a key element.
The new cities
Meanwhile, many see this crisis as an opportunity to rethink the city and to do away with some of its long-standing problems, whether it is the concentration of jobs in areas like Midtown Manhattan, exorbitant housing prices, the poor state of transportation services or the excessive role of the automobile in urban planning.
The pandemic has been a “reminder that the city is not Midtown Manhattan, it’s the suburbs, and that’s what matters,” Columbia University professor Rohit Aggarwala explained on Thursday at a conference organized by the Manhattan Institute.
Alain Bertaud, a researcher at New York University’s Marron Institute, pointed to the positive effect that a reduction in office space and its conversion to housing can have, helping to reduce prices and bringing a new generation to areas of the city that are now unaffordable for young people.
Transportation may also be among the beneficiaries, according to Aggarwala, who believes that the transition to a model in which a majority of employees will not commute to the office will address the problem of congestion on the roads and the overcrowding seen on the subway during rush hour.
The era of ‘work from work’, opined trade journalist Henry Grabar, may even be a boon for New York and attract many people to the city who have always dreamed of living in the Big Apple.
“The fundamental package of amenities, quality of life, car-free living…the things that New York offers that no other American city offers remain unique,” he noted.
The flight of talent and capital due to high taxes
However, despite the attractions of a city like New York, its state taxes remain among the highest in the United States, and this, coupled with high rent prices, makes the city a poor choice for many people in times of telecommuting. As long as the city and the state continue to impose high tax burdens on their residents, talent and companies will continue to leave to places where the authorities treat them better and offer them better conditions to work and do business, which is why today Florida and Texas are the destination places for entrepreneurs, employees, and large capitals.