Global Banks Slash Office Space In New York
USA – A number of important office tenants, particularly financial institutions, are reducing their office space in New York, a city whose office market largely relies on financial firms, reported The Real Deal on Thursday morning (3 March, SGT).
For instance, New York City’s biggest office tenant, JPMorgan Chase, slashed its office footprint by 400,000 sq ft in 2021, according to Crain’s. The bluechip bank, which announced that it intends to “significantly reduce” its office footprint across the world in the next few years, also downsized by 300,000 sq ft in 2020.
While JPMorgan Chase still leases 8.7 million sq ft of office space in New York City, a business of that magnitude can generate a ripple effect if other companies decide to follow suit, given that its Chief Executive Jamie Dimon was at the forefront of the return-to-office movement in 2021.
At the same time, Wells Fargo slashed its office space in the city by 600,000 sq ft. Across the country, insurance company Voya Financial, Bank of New York Mellon, and financial index provider MSC are also reducing their workspace.
Michael Fusco, a representative from JPMorgan, said they remain “committed to New York City and planning for the next 50 years.” He pointed out their new headquarters that is being built at 270 Park Avenue. Around 14,000 of the bank’s staff are expected to work there.
However, JPMorgan’s moves suggest that it might be hedging its bets. For instance, Bloomberg reported on Wednesday that the bank is considering to sublet 100,000 sq ft at its Hudson Yards office at 5 Manhattan West and 700,000 sq ft at 4 New York Plaza in New York’s financial district.
“Remote work will change how we manage our real estate,” JPMorgan Chase CEO Jamie Dimon stated in a letter to stockholders in 2021.
Meanwhile, owners of office buildings in New York are still feeling the impact of the COVID-19 pandemic. In fact, the latest market report from Colliers shows that office availability in New York hit a new high in February. Slightly under 94 million sq ft of office space was available to lease in Manhattan last month.
As a result, the availability rate reached 17.4 percent, a 74 percent surge from the onset of the virus outbreak. Average asking rents across Manhattan are just up slightly from their pandemic lows at $74.88 psf, which is almost 6 percent below pre-COVID levels.