As if things couldn’t get worse for commercial real estate in New York City, experts say the market won’t reach its bottom until the spring.
But it isn’t all bad news. That’s also when the Covid-19 vaccine will be distributed more broadly and people will begin to feel more comfortable coming back to their offices, said Rudin Management CEO Bill Rudin. “That’s going to be the turning point,” he said.
In the meantime, developers and landlords are trying to make sense of the current market. “What we’re dealing with right now is a lot of empty buildings,” said Nelson Mills, the CEO of real estate investment company Columbia Property Trust. The firm’s buildings are currently only 10% occupied, and tenants aren’t expected back until the summer, he said.
Though leasing activity has been dismal, prices haven’t moved much, unlike the residential market. Commercial property owners are taking a “wait-and-see” approach to see just how much they’ll need to negotiate to get tenants into their buildings, partly because commercial leases tend to be for multi-year periods.
They’ll come down eventually, Mills said, especially in older buildings that haven’t been renovated in a while.
As more sublease space comes on the market, there will be more downward pressure on prices, said Lori Albert, a director of research at Cushman & Wakefield. While asking rents may