- The delayed return to office buildings for many workers during the COVID pandemic has been particularly harsh on businesses around midtown Manhattan, which has the largest inventory of office space in New York City.
- This summer, about 30% of retail storefronts around Midtown East and Grand Central were empty, according to a new report from REBNY.
- This compares to a retail vacancy rate of 28.4% on Madison Avenue and 20.9% on the Upper East Side.
Before the pandemic, it would take Rob Byrnes at least 15 minutes to wait in line and grab a quick lunch at a fast-casual restaurant in midtown Manhattan. Now, in the minority of people returning to office buildings in the area, Byrnes says he’s in and out with his meal in less than two minutes.
But he would love to stand in a line full of people again.
“We are nowhere near the need for a consistent retail and restaurant environment in the region,” said Byrnes, president of the East Midtown Partnership, a business improvement district that spans parts of 48 blocks in Midtown. Quite quiet too.”
Many businesses that promised to bring employees back to the office after Labor Day put those plans on ice, potentially in 2022, with the spread of the Delta variant and a heat wave. Delays have been particularly harsh on businesses in Midtown, which has the largest inventory of office space in New York City.
This summer, about 30% of the retail storefronts around Midtown East and Grand Central were empty, According to a new report from the Real Estate Board of New York, or REBNY. This compares to a retail vacancy rate of 28.4% on Madison Avenue and 20.9% on the Upper East Side. This is the highest rate of all Manhattan boroughs, REBNY said.
Historically, the Midtown East and Grand Central Corridors have maintained a retail vacancy rate of somewhere between 10% and 15%, according to the Real Estate Trade Association.
"We have to get people back in the office to keep this economy humming," Byrnes said.
Pre-pandemic, REBNY estimated that office populations in Midtown East and Grand Central were supporting 2,579 businesses, including eateries. Neighborhoods accounted for about 11.4%, or $6.5 billion, of Manhattan's annual retail sales.
Today, REBNY says 93 retail storefronts are vacant. On a stretch of commercial real estate across high-end department store operator Bloomingdales, East Gap, Banana Republic and Victoria's Secret locations, the entire block along Third Avenue has been abandoned between 58.th st and 59th St. Street emptied.
"These findings confirm the serious impact the pandemic has had on the retail sector in Midtown and continues to grow," said Fred Cerullo, president and CEO of Grand Central Partnerships. "For these businesses to thrive, they need the foot traffic generated by tourists and office workers."
"They all contribute to the economic ecosystem that generates billions in business activity and tax revenue, which the city needs now more than ever," Cerullo said.
Storefronts remain barren, even as rents around the midtown area have dropped, a sign that businesses are still holding off on taking up space. Or they don't plan to return at all.
42. FromRa st to 49th Fifth Avenue (near Grand Central), the average asking rent this spring was $615, down 12% year over year, As per REBNY's Biennial Rent Report. and with 57th 5. from stth Ave. from Park Ave. (Midtown East), the average asking rent amount was $531, a 22% decline year-over-year.
According to Gene Spiegelman, a vice chairman and principal at leasing firm Ripco Real Estate, an additional layer of pressure stems from the fact that many national retailers, including Gap and Victoria's Secret, are steadily reducing their real estate, as are buying online. moves.
"Companies are changing their minds on flagship retail as well," Spiegelman said. "So it's complicated beyond covid. But covid hasn't helped."
There is still a long way to go to bring people to the office. In the week of September 29, only 29% of employees in the New York metro area swiped in office buildings, According to data from security company Castle Systems. This was up from the previous week's 27.6%. But it was still below the nationwide average of 35%, Kastle said.
a separate survey by Partnership for New York City The recent found that Manhattan employers expected about 41% of their employees to report in offices by September 30, down from the 60% expected in a survey conducted earlier in May.
According to Cushman & Wakefield, a record 19% of Midtown's roughly 250 million square feet of office space -- about 47.4 million square feet -- was vacant in the second quarter of this year.
"The worst part is we don't know where the bottom is," said Jessica Walker, president and CEO of the Manhattan Chamber of Commerce. "Tourism, which is a big part of the economy and foot traffic in Midtown, has been put on hold."