There’s good news for Manhattan office owners: Physical building occupancy increased to 46.6% for the seven-day period ending September 14, according to the widely followed Kastle Systems Back-to-Work. Barometer.
The jump after Labor Day was a huge increase from Kastle’s tally of 38% from the previous week – and a jump from the low 20s last winter.
But the news could be even better than that. Although Kastle is widely cited as the oracle of office occupancy, its data is less inclusive than most market watchers think. For this reason, the number of employees returning to their desks despite working from home and hybrid work schedules is likely higher than Kastle’s data suggests.
The sample of buildings where the security provider counts entry scans does not include many of the city’s largest real estate empires, where tenants include more banks and financial services firms than the average. the city. Wall Street companies have more employees in their offices than technology, creative and media companies.
Given the visibility of the Kastle Barometer – Realty Check has often quoted its findings like the rest of the real estate media – it’s hardly unfair to note what the survey omits.
Kastle does not cover properties owned or managed by Rudin Management, Silverstein Properties, Tishman Speyer, BXP (formerly Boston Properties) and related companies, according to their representatives.
Of 40 Manhattan locations with over 34 million square feet owned or managed by the city’s largest commercial landlord, SL Green, Kastle is present in just one recently acquired property.
Empire State Realty Trust does not use Kastle at the Empire State Building or most of its other tall towers. The Durst Organization uses Kastle in nine buildings but not in its two largest, One World Trade Center and One Bryant Park.
Until last week, Kastle’s estimate of New York City office utilization hovered between 30% and 40%. But its latest tally of 46.6% brought it closer to last week’s estimate of 49% by the Partnership for New York City. The Partnership’s data is based on estimates provided by 160 major employers.
Partnership Chair Kathryn Wylde, while noting that her organization’s findings “have only been a few points away from Kastle during the pandemic”, said: “Our membership composition may obviously differ from theirs. . We are betting a lot on financial services, which are more present in the office than technology, for example.
Despite Kastle’s previous gloomy weekly snapshots, August saw more rental volume in Manhattan than any month since the pandemic began. The boom boiled over in September with a nearly 140,000 square foot deal for Blue Owl Capital at the Seagram Building.
If Big Apple offices are as lonely as Kastle suggested, why do the very smart companies keep signing leases?
There is also a second possible fudge factor. Kastle includes, not the central business districts of 10 American cities, but their “metropolitan areas”. It turns out that the “NYC Metro” includes suburbs far beyond the Big Apple.
We asked The Partnership why their numbers last week were 11 percentage points higher than Kastle’s. One reason was that the measurement periods of the two organizations did not coincide exactly (the Partnership survey was based on employers’ estimates between August 29 and September 12, while Kastle only reported the week ending September 7).
But when the Partnership asked Kastle to clarify its sample, the security firm told them it defined the New York City subway “as the larger central statistical area, which includes Long Island, Westchester and other counties in New York, in addition to parts of New York. Jersey and Pennsylvania.
When The Post asked Kastle rep Audrey Chang to confirm that her sample included suburbanites, she acknowledged via email: “Yes, although the focus is on Manhattan Class-A…based on trending details of over 200 buildings in New York. ”
Citing customer privacy, Chang wouldn’t say which locations he does or doesn’t include in his data.
Mary Ann Tighe, CEO of CBRE Tristate, said, “Of all the data, I believe that from the Partnership is the most reliable because its members represent a cross section of the largest employers in the city.
The streets of Manhattan were packed last week. Durst Organization spokesman Jordan Barowitz reported 75% occupancy on Sept. 13 across Durst’s 13 million square foot Manhattan portfolio. Related insiders say its eight million square foot Hudson Yards skyscrapers are 60% full.
JLL tristate CEO Peter Riguardi laughed, saying, “I equate it to when you look at your iPhone and it says it’s raining, but you look outside and it’s sunny.
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