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People are returning to the office in New York City, but they apparently have a preference for higher-end buildings.
That’s according to a new dataset the Real Estate Board of New York created with help from a company that uses cellphone data to track visits to individual buildings.
The report was the latest to confirm that office visitation remains well below pre-pandemic levels. But it found that not all offices are created equal with more workers returning to Class A office buildings than lower-priced ones.
“As the office sector continues to evolve in the wake of the pandemic, it is critical to gain a nuanced understanding of how building visitation trends are playing out in different segments of the market,” said Keith DeCoster, director of market data and policy for REBNY. “Based on our initial analysis of location data from Placer.ai we have found that building visitation rates range widely from a single market median or average. The data reveals important dynamics in the market that must be more closely analyzed.”
Using individual and anonymized data from cell phones, Placer.ai can determine changes in visits to specific office towers in 2019, 2021 and 2022.
The report has implications for the real estate market in New York and elsewhere as office performance has indications for the broader economy, the retail sector and residential demand.
According to the report, visits to 250 different office buildings in Manhattan were over 60 percent of the visitation in 2019 between January and mid-December in both 2021 and 2022.
The data includes offices throughout Manhattan with a total of 180 million square feet or about one-third of the borough’s stock of office buildings.
The most activity comes from Class A office buildings, the typically newer, higher-end and more expensive office buildings.
Among the report’s other findings:
- Visitation rates in nearly two-thirds of buildings exceeded 50 percent of pre-pandemic baselines.
- Class A properties displayed stronger growth (66.3 percent average visitation rate) in comparison to Class B properties (53.6 percent average visitation rate).
The report is in contrast to other widely-cited sources of office visitation since the start of the COVID-19 pandemic.
A company called Kastle maintains a weekly “Back to Work Barometer” for 10 large U.S. cities. That report puts mid-February workplace occupancy rates at 47.8 percent, slightly lower than the 10-city average of 49.8 percent.
But that doesn’t break out buildings by class or submarket within the cities, REBNY pointed out. What’s more, it’s not immediately clear what pre-pandemic occupancy rates really were.
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