Some companies are getting ready to bring workers back to their offices, but the amount of office space available for lease in Manhattan has reached its highest rate ever, according to recent reports. This increase highlights how the shift to remote work during the coronavirus pandemic is disrupting the city's commercial real estate industry. In Manhattan, where the two largest business districts in the country are located, 18.7% of office space is now available for lease, up from over 15% at the end of 2020 and more than double the rate before the pandemic. New York employers are offering more flexibility to their employees, allowing some remote work even as the pandemic eases, and rethinking their space requirements. Consequently, companies are terminating their leases or looking for new tenants at a steady pace. Some areas, like Downtown Manhattan, are experiencing more difficulty, with 21% of offices currently vacant, according to Newmark. Kathryn Wylde, president of the Partnership for New York City, stated that New York City is currently facing its most significant crisis since the 1970s, when half of the city's Fortune 500 companies relocated. Wylde emphasized the urgency of the situation, comparing it to the mass exodus experienced in the 1970s, which took 30 years to recover from. She highlighted the need for the city to attract residents for reasons beyond office work. New York, which before the pandemic drew 1.6 million daily commuters to its offices, is facing unique challenges in adapting to the changing workplace landscape. The pandemic has also had a major impact on the commercial real estate sector, a crucial component of the city's economy. Landlords are scrambling to redesign offices and offer incentives like lower rent to retain and attract companies. Commercial property taxes are the largest source of revenue for New York City, with commercial properties contributing 41% of that revenue. Commercial areas in various cities are facing challenges, with office buildings in Manhattan experiencing a significant decrease in occupancy. Other cities like Atlanta and Los Angeles are showing some improvement in their office occupancy rates post-pandemic. Despite New York having a higher vacancy rate compared to the national average of 16.2% as of March, other cities such as Los Angeles and Chicago are also struggling to fill their office spaces. Los Angeles currently has a 24.1% vacancy rate, while Chicago's rate is at 21.9%. However, both cities had higher vacancy rates prior to the pandemic compared to New York. The situation in New York is showing signs of potentially worsening. According to CBRE, approximately one-third of leases in large Manhattan buildings will expire in the next three years, and companies have indicated they will require less space. The availability rate in New York City is currently at its highest level since the mid-1970s when the city was in a financial crisis and skyscrapers like the Twin Towers were being built. Franklin Wallach from Colliers predicts that the amount of available office space in Manhattan will continue to increase due to ongoing construction and relocation plans by large companies. There are currently 14 million square feet of office space under construction in New York City, which is double the size of Orlando, Florida. Wallach believes that the office market in Manhattan will recover in different ways, similar to the uneven economic recovery seen across various industries. Neighborhoods near major transportation hubs such as Pennsylvania Station and Grand Central Terminal may see a quicker recovery compared to other parts of Manhattan, according to Wallach. While the overall real estate market is expected to bounce back in the long-term, the timing and specifics of the recovery will vary depending on location. Savills predicts that the Manhattan office market may not fully rebound to pre-pandemic levels until late 2022 or later. A survey by the Partnership for New York City found that only 12% of Manhattan office workers had returned to their workplaces by the end of May, with over 60% expected to return in September. However, many companies are likely to continue allowing employees to work remotely for at least some days of the week. Throughout the pandemic, the technology sector has been the only industry in New York signing significant leases, with companies like Facebook and Google being well-equipped to transition smoothly to remote work. According to Facebook's CEO, Mark Zuckerberg, he plans to spend half of next year working outside of the office. Wylde noted that the tech sector's growth seems to be temporary, as employees are pushing for permanent remote work or hybrid schedules. Workers are expressing their desire to avoid paying high rent in cities like New York just to work in the office a few days a week. Wylde also mentioned that other cities have become more competitive due to the pandemic and remote work trend, emphasizing the need for public policy to prioritize quality of life, business climate, and affordability.