Op-ed: Conventional wisdom about New York commercial real estate today is dead wrong
Flight to quality
Flight to quality is now the driving force behind the leasing activity buoying the market’s finest office properties.
In the third quarter of last year, leasing volumes posted the strongest quarterly gains since 2019, and a record number of leases were signed for more than $100 per square foot in 2022.
At The Durst Organization, our net effective rents for new leases since March 2020 are higher across the commercial portfolio compared with the two and a half years before the pandemic. Vacancy is down compared with prepandemic figures at some of our top-tier properties including 151 W. 42nd St., 1155 Sixth Ave. and 1 World Trade Center.
Remote work continues to be a part of the toolkit for employers, but just as schools discovered remote learning’s limitations and pivoted back to in-person instruction, employers are recognizing the importance of their office space.
Yes, there’s real pressure on owners of Class B and C office buildings to upgrade their spaces, innovate a fresh story, attract different kinds of tenants or consider converting offices to residential use to meet shifting preferences in the market.
Those trends were well underway a decade ago, and many owners were already responding before the pandemic by making new investments or repositioning their assets.
Change is the only constant in our business, and as long as I’ve been around, there’s never been a time in the commercial office market where we’ve had the luxury of standing still.
The pundits might see clouds on the horizon, but I see the future of commercial real estate in New York coming into focus. And I like what I see.
Douglas Durst is chairman of The Durst Organization