Occupancy & leasing tick up yet market still has a long road to “normal” ahead

New York is slowly rebounding from pandemic fallout with physical office occupancy increasing as tenants formulate return-to-office plans. According to Kastle Systems, office occupancy for the New York Metro was 21.7% in June, up from 13.9% in March. Renewed interest in re-occupancy has also led to more leasing. Activity reached 4.9 million square feet (msf) during the second quarter, up 21.8% from Q1. This marks the highest quarterly total since the onset of the pandemic. Still, demand volume remains well below a typical pre-pandemic quarter. Even if the market saw an unlikely return to the five-year quarterly average volume (8.5 msf) in Q3 and Q4 of this year, 2021 would still end the year 40% below pre-pandemic levels of activity. With new supply continuing to grow and availability edging closer to 20%, it is unlikely that the market will see a rebalance of supply-demand until late 2022 or beyond.

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