In the summer of 2022, the 1.7 million square-foot office tower at 787 Seventh Avenue was less than 20% occupied by employees of such tenants as BNP Paribas, Sidley Austin and Willkie Farr.
Aldo Sohm Wine Bar, a sister restaurant to three-Michelin-star Le Bernardin, struggled to draw a lunch crowd. But now, 787 Seventh is “mostly full except on Fridays,” according to CBRE power-broker Howard Fiddle, the building’s leasing agent.
“They brought their people back midweek,” Fiddle said. “And Monday is picking up too.”
Le Bernardin chef-owner Eric Ripert confirmed the welcome trend, which he termed “great news” for the wine bar in the building arcade.
The 787 Seventh office influx illustrates broad findings of the Real Estate Board of New York’s new Manhattan Office Building Visitation Report, to be released Monday.
The data present a more optimistic and nuanced picture than what Durst Organization principal David Neil called “certain gloomy headlines” about the slow-but-steady office-return trend as more companies, especially in finance and law, bring their staff in at least three days a week — and others plan to make it four.
The REBNY study corrects the common misconception that current occupancy rates cited in surveys (including REBNY’s own and the oft-cited Kastle Systems Back to Work Barometer) are based on what many people believe were full offices before COVID hit.
However, REBNY points out, “It would be inaccurate to define full recovery of the office market as returning to 100% occupancy” — which it calls “a goal line that never existed.” In fact, pre-pandemic offices were only “occupied by employees at 80% of their total capacity for around four days a week.”
Attendance plummeted to under 10% of pre-COVID levels during the pandemic and has since rebounded — although not to 2019 levels. But how strong the recovery has been is open to interpretation.
REBNY used proprietary data from Placer.ai to measure a sample of 50 key Manhattan office buildings (Placier.ai’s algorithm identifies employees’ mobile-device visits). It found that employee office visits Tuesday through Thursday in the first five months of 2023 averaged 68% of 2019 levels — much higher than Kastle’s roughly 50% Manhattan estimate.
The numbers dropped on Mondays to 56% of what they were in 2019 and 37% on Fridays, according to REBNY.
A different REBNY metric called same-day comparison, which compares certain specific days such as the first Friday of April 2023 to the first Friday of April 2019, cited an even higher percentage of pre-pandemic attendance — 73%.
REBNY’s director of market data Keith DeCoster, who wrote the report, said it “makes even clearer that employee visitation rates continue to rebound strongly during mid-week days, while total office building visitation rates are also growing throughout the week, even amid hybrid work policies.”
The “total visitation” data include visits to office building components such as stores, restaurants, galleries and medical facilities. The survey included them because “office buildings have a bigger impact on the economy” than offices alone, DeCoster said.
Fiddle strongly endorsed the REBNY findings.
“I believe the return-to-office numbers are empirically up,” he said. “Nobody says they’re seeing fewer people in the office.”
He noted that Midtown’s Class-A properties are in a stronger position than in Midtown South or Downtown because “financial and law firms want their people back.”
“Walk up or down Park Avenue and everything’s full,” Fiddle said.
Not so in other parts of Manhattan with tech and creative industries, which can more easily adapt to remote work.
[Written in collaboration with other media outlets with information from the following sources]
