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Transcript/ScriptNY-REMOTE-WORK-REAL-ESTATE-VALUE-TV
HEADLINE: New York City Office Buildings Lose $400B in 2 Years
TEASER: As the city recovers from COVID-19, it still faces a challenging economic
future due to the popularity of remote work
PUBLISHED AT: 03/15/2023 at
BYLINE: Aron Ranen
CONTRIBUTOR:
DATELINE: New York City
VIDEOGRAPHER: Aron Ranen
PRODUCER:
SCRIPT EDITORS: Tsikhanenka, Holly Franko
VIDEO SOURCES: VOA
PLATFORMS: WEB__TV_X__RADIO_X_
TRT: 2:55
VID APPROVED BY: mia
TYPE: TVPKG
UPDATE: ))
((INTRO: ))
[[With fewer people coming to work at offices in Manhattan, New York City's commercial
real estate market has lost about $400 billion dollars in value since the start of the
pandemic. Aron Ranen has this story from the Big Apple.]]
((VIDEO: NEW YORK CITY SKYLINE AND INTERIOR EMPTY OFFICE BUILDING)
[[NAT SOUND NEW YORK CITY STREET]]
((VIDEO: NEW YORK CITY OFFICE BUILDINGS & PROFESSOR DR. VAN
NIEUWERBURGH IN OFFICE)
((NARRATOR))
New York City is full of panoramic views, but many of its offices now sit empty. Office
occupancy, defined as the percentage of people who come to the office, is only 43% of
pre-pandemic levels, and on Fridays it drops down to 21%, according to Kastle
Systems. The effect on the economy — $12 billion in lost spending by these workers,
leading to closed retail and restaurants. But the bigger risk is to the equity that's
invested in many of these office buildings.
[[Radio: Stijn Van Nieuwerburgh is a professor at Columbia University Business School
in New York]]
((VIDEO: NEW YORK CITY OFFICE BUILDINGS)
((Stijn Van Nieuwerburgh, Columbia University))
"COVID sort of started this off, but this has had major repercussions for office values, in
particular. And what we found is that those changes have caused a reduction in value of
about $400 billion over these last two years."
((VIDEO: NEW YORK CITY OFFICE BUILDINGS)
((NARRATOR))
Two-thirds of New York City office leases will come up for renewal in the next three to
four years. Van Nieuwerburgh says this could present more challenges for the New
York market.
[[Radio: Van Nieuwerburgh again]]
((VIDEO: NEW YORK CITY OFFICE BUILDINGS)
((Stijn Van Nieuwerburgh, Columbia University))
"So I like to say that the second shoe is yet to drop on the office market. So what we
see if we sort of take a projection of these future rollovers is that, all in all, about a 40%
reduction in value for the New York City office stock."
((VIDEO: NEW YORK CITY OFFICE BUILDINGS)
((NARRATOR))
What will happen to New York City if work at home becomes the norm?
((VIDEO: NEW YORK CITY OFFICE BUILDINGS)
[[Radio: Van Nieuwerburgh again]]
((Stijn Van Nieuwerburgh, Columbia University))
"I think the worst-case scenario for large cities, including New York City, is that
employees do not return to the office, this becomes a new way of working. And so we'll
then have a lot of empty, vacant downtown areas where tax revenues are falling, there's
not enough money coming in for the city to stabilize the situation. And we go into this
downward spiral, this urban doom loop."
((VIDEO: NEW YORK CITY OFFICE BUILDING AT 425 PARK AVE)
((NARRATOR))
While the new research provides a grim forecast for the broader commercial real estate
market, high-end properties, like this one at 425 Park Avenue, are seeing near to full
occupancy for long-term leases. These buildings feature amenities, such as meditation
rooms, Michelin-starred chefs providing in-office catering to tenants and a state-of-the-
art coffee bar.
((VIDEO: NEW YORK CITY OFFICE BUILDING AT 425 PARK AVE))
[[Radio: Jamil Lacourt is a partner at L&L Holding Company]]
((Jamil Lacourt, L&L Holding Company))
"We're very fortunate that we did build this with the vision that the partners had to build
it, because we are attracting more leases that are going to be signed. We're about 86 to
89% occupied today."
((VIDEO: NEW YORK CITY OFFICE BUILDINGS))
((NARRATOR))
But the handful of such luxurious office buildings represents just a fraction of
Manhattan's commercial real estate market.
To find a solution, New York City Mayor Eric Adams recently visited an office building in
lower Manhattan that was converted into apartments.
((VIDEO: NEW YORK CITY OFFICE BUILDING AT 425 PARK AVE))
((VIDEO: NEW YORK CITY MAYOR AND AIDES AT PRESS CONFERENCE-VIDEO
CITY OF NEW YORK))
[[Radio: Eric Adams, New York City mayor]]
((Eric Adams, New York City Mayor))
"The bottom line is we must make it easier to convert office buildings, like the one we
just toured, into housing for New Yorkers. We're talking about millions of square feet of
office space."
((VIDEO: NEW YORK CITY OFFICE BUILDINGS)
((NARRATOR))
With recent efforts to convert offices into housing, and New York City's vibrant cultural
and culinary destinations, there is still hope that New York City will attract enough
people to survive the long-term effects of remote work.
((Aron Ranen for VOA News, New York City))
NewsML Media TopicsArts, Culture, Entertainment and Media
NetworkVOA
Location (dateline)New York City
Embargo DateMarch 15, 2023 22:20 EDT
Byline((Aron Ranen for VOA News, New York City)
Brand / Language ServiceVoice of America - English
