Manhattan Office Rents Seen Plunging 26% in Prolonged Downturn

(Bloomberg) -- Manhattan’s office rents are likely to plummet to the lowest level since 2012 if the U.S. economy doesn’t recover quickly from the pandemic.

Asking rents could decline 26% to about $62.47 a square foot (roughly $672 per square meter) in a prolonged recession, according to a report from Savills. Rents haven’t fallen to that level since 2012, the real estate services firm said.

Some offices in New York City have reopened, though many buildings remain empty. The city faces a long recovery with workers wary of public transportation and dense workplaces.

“Many assume that when the stay-at-home measures are lifted, there will still be Covid-19 fears that will continue to materially influence behaviors and the economy,” Savills said. “These fears will likely remain until a vaccine or antibody therapy is developed and widely available, which experts currently estimate is at least 12 months away.”

Savills’ research used indicators that it says are correlated to rental rates, including gross domestic product, unemployment and office vacancies in Manhattan.

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