Some companies are getting ready to bring employees back to the office, but the amount of office space available for lease in Manhattan has reached a record high, indicating how the shift to remote work during the pandemic is disrupting the city's commercial real estate industry. In Manhattan, which is home to the two largest business districts in the country, 18.7% of office space is now available for lease, up from 15% at the end of 2020 and more than double the pre-pandemic rate, according to a report by Newmark. Employers in New York are offering more flexibility to their employees, allowing for remote work even as the pandemic eases, leading to companies either ending their leases or looking for tenants to take them over. Some areas, like Downtown Manhattan, are particularly struggling, 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 125 Fortune 500 companies relocated. She emphasized that the city is on the brink of a similar scenario, with an exodus occurring and a potential lengthy recovery period. Wylde emphasized the need for the city to attract people for reasons beyond just going to work. New York, with 1.6 million daily commuters pre-pandemic, is facing unique challenges in adapting to the changing workplace, impacting various sectors of the economy from shops to restaurants to Broadway theaters. The commercial real estate sector, a key component of the New York economy, is under immense pressure as landlords scramble to reconfigure offices and offer incentives like reduced rent to retain and attract businesses. Commercial property taxes are a significant source of revenue for New York City, making up 41% of the total. Commercial areas throughout the country are facing challenges, but Manhattan's office buildings are particularly struggling as they continue to empty out. Despite this, cities like Atlanta and Los Angeles are showing some signs of recovery from the pandemic. Although New York's vacancy rate is higher than the national average of 16.2%, many other cities are also experiencing difficulty filling their office spaces. Los Angeles currently has a vacancy rate of 24.1%, while Chicago's rate is 21.9%. However, both cities had higher vacancy rates prior to the pandemic compared to New York. There are indications that the situation in New York may deteriorate further. According to CBRE, a third of leases at large Manhattan buildings will expire in the next three years, and companies have indicated they will need less space. The availability rate in New York City is currently the highest on record, dating back to the mid-1970s. Franklin Wallach, a senior managing director at Colliers, predicts that available office space in Manhattan will continue to increase due to new construction and relocation plans by large companies. Currently, 14 million square feet of office space is under construction in New York City, equivalent to double the size of Orlando, Florida. Wallach believes that the office market in Manhattan will recover unevenly, similar to the broader economic recovery. Residential areas near major transportation hubs like Pennsylvania Station and Grand Central Terminal may see a quicker recovery compared to other parts of Manhattan. According to Wallach, the overall market will eventually recover, but the timing and manner of recovery will vary depending on location. Savills, a real estate firm, predicts that the Manhattan office market won't fully bounce back to pre-pandemic levels until at least late 2022. Currently, only 12% of Manhattan's office workers have returned to their workplaces, with over 60% expected to return in September. However, many companies are allowing employees to work remotely for at least a few days a week. Throughout the pandemic, the technology sector has been the only industry signing major leases in New York, with companies like Facebook and Google able to smoothly transition to remote work. In June, Facebook's CEO, Mark Zuckerberg, announced his plan to spend half of the following year working outside the office. Wylde noted that the tech sector's growth seems to be temporary, as employees are increasingly requesting permanent remote or hybrid work options. Many employees are hesitant to continue paying high rent in cities like New York to work in the office only a few days a week. Wylde emphasized that other cities have become more attractive due to the pandemic and the rise of remote work. She suggested that a shift in public policy is necessary to prioritize quality of life, a positive business environment, and affordability.