More Workers Are Returning to NYC Offices Than You Think

Nearly 60% of Manhattan Office Workers Are Back at Their Workplace, Study Finds

A recent study by The Partnership for NYC reveals that the number of employees returning to Big Apple offices post-Labor Day is much higher than you might think. But don’t expect this number to increase any time soon.

By the numbers: According to the survey, 58% of workers are at their desks on an average weekday, compared to 52% in January 2023 and 49% in September 2022. These figures surpass the 50.1% reported by the Kastle Systems Back-to-Work Barometer for “metro” New York. The study highlights a return-to-office rate of 72% vs. the pre-pandemic average of 80% office attendance on weekdays.

What does this mean? The actual decline in office attendance since 2019 is smaller than previously assumed, challenging the perception of a significant drop in office usage during the pandemic. Kastle Systems primarily covers Class A- and B properties. However, it lacks data from some of the city's largest commercial landlords, like SL Green (SLG), Vornado (VNO), and Related Companies, which have a significant presence of real estate.

Leading the way: As of September, the real estate sector leads in average daily attendance at 75%, with financial services and law trailing closely at 65%. Below-average attendance is noted in the tech (53%), media (52%), and accounting (42%) sectors. Projections don’t foresee notable increases in any industry, with anticipated “new normal” rates as follows: real estate at 76%, law at 66%, financial services at 65%, tech at 54%, media at 53%, and accounting at 50%.

➥ THE TAKEAWAY

Road to recovery: Manhattan serves as a bellwether for the nation, and the slow return to office contributed to a record-high office vacancy rate of 13.4% in NY. Contrary to the belief that most workers are working remotely, the survey indicates only 6% are doing fully remote work, down from 10% in January. While the return of Manhattan office workers is on the rise, the expectation is that this will only grow to 59% on a long-term basis.

Don Peebles: Visionary Leader

In the latest episode of GreyCast, Greysteel had the privilege of hosting Don Peebles, a renowned entrepreneur, author, and advocate, accompanied by Ari Firoozabadi, CEO of Greysteel, and Nigel Craton, Director at Greysteel.

The episode delves into Don's influential journey in real estate, shedding light on his trailblazing projects and unwavering commitment to diversity and inclusion. Ari and Nigel also shared insights from their experiences at Greysteel.

Don's narrative, combined with Ari and Nigel's perspectives, paints a vivid picture of resilience, ambition, and the drive for positive change.

Tune in to discover their collective vision for a more equitable future in commercial real estate.

Credit Draws Increased Interest from Insurers as Private Equity Takes a Backseat, Reports BlackRock

BlackRock (BLK) says that insurance executives overseeing $29T are shifting their investment focus, with nearly 90% planning to up investments in private debt and credit strategies while reducing exposure to private equity and real estate.

Investment insights: According to a survey of 378 senior insurance executives, 89% plan to boost investments in private markets over the next two years. Their most favored private vehicle is direct lending, with 60% of respondents planning to up allocations to this sector. However, 34% of executives intend to reduce investments in private equity, and a similar percentage planned to lower their bets on real estate equity and debt.

Balancing act: Despite the overall interest in increasing allocations to private markets, concerns about market volatility and disruptions in private equity and real estate are leading to a more selective approach. Institutional investors face challenges due to rising rates, leading to stocks and bonds declining. This has made respondents prioritize flexibility in asset allocation, especially since they can’t easily rotate assets as they did when bonds were in unrealized gain positions.

Chasing yield: Despite the attractive yields of 5%+ on government and corporate bonds, interest in private investments, particularly high-quality investment-grade private debt and asset-backed strategies, remains strong among investors. Insurers are keen to increase allocations to top-tier investment-grade private debt, asset-backed strategies, and direct lending to SMBs.

➥ THE TAKEAWAY

Investment evolution: BlackRock’s findings unveil a noteworthy shift in the investment strategies of insurers. It seems there’s a growing trend for bumping up allocations in private debt and direct lending, especially with the current market roller coasters. Despite the tempting yields on bonds, the interest in top-notch private investments isn’t losing its charm—it's all about striking the right balance in these shaky market times.

Black Salmon, Allen Morris Co. Plan $1B Highland Park Miami Mixed-Use Project

Developer Camilo Lopez's Black Salmon is partnering with Allen Morris Company on a $1B mixed-use development called Highland Park Miami in the Health District to be built over the next decade.

Strategic location: This ambitious project, named Highland Park Miami, will span over 7 acres and is projected to comprise 500,000 square feet of medical office space, 1,000 apartments, a 150-room hotel, retail spots, and lush green spaces. Scheduled to be executed in several phases spanning the next ten years, the buildings could reach heights of up to 22 stories.

Playing the long game: Lopez meticulously acquired nearly 50 properties over a decade, investing approximately $60 million, especially targeting areas close to the Metrorail. This strategic land assembly focuses on transit-oriented development, promoting higher density in line with mass transit routes. The resultant project is hoped to increase the health district's area by 10%.

Architectural vision: Internationally acclaimed firm Arquitectonica has been entrusted with the project's design, with visions of enhancing the district's aesthetic appeal. Bernardo Fort-Brescia of Arquitectonica emphasizes the importance of integrating office spaces with recreational areas, aiming for a harmonious blend where one can work, live, and relax. The design further boasts an activated green rooftop, complete with walking tracks and fitness zones.

➥ THE TAKEAWAY

Big picture: Highland Park Miami isn't just another development; it promises to be a masterful amalgamation of utility and aesthetic splendor, bringing together medical facilities, residences, and recreational spaces under a single, architecturally delightful umbrella. This project aims to redefine the way people perceive mixed-use developments.

According to Savills, the total value of global real estate, including residential, commercial, and agricultural land, stood at a staggering $379.7T, reaffirming real estate's status as the world’s most significant store of wealth.

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