Mar 6, 2023 - Economy

When it comes to office buildings, it's survival of the fanciest

Office visits in Manhattan, by building quality
Data: Placer.ai, Building Classifications Determined by REBNY with assistance from Newmark Research; Chart: Rahul Mukherjee/Axios

Some companies are going all out to entice workers back to the office, and, as new data on New York City shows, a super-fancy office might help do the trick.

Driving the news: Visits to Class A+ buildings in Manhattan, i.e. the swankiest places to work, far outpaced visits to Class B buildings, or the less flashy locales, according to an innovative new dataset from the Real Estate Board of New York (REBNY).

Zoom out: This so-called flight to quality had been underway before the pandemic, said Keith DeCoster, director of market data and policy for REBNY. But the transition to remote work sped up the trend.

  • Being at a prime location with great amenities "is going to give you at least a leg up in getting folks back to the office," he said.

Case in point: Occupants of SL Green's One Madison, a massive renovated office building in midtown south, will have access to an in-house catering service attached to celebrity chef Daniel Boulud — among a host of other amenities.

Details: REBNY's new report looks at location analytics — from randomized Placer.ai cellphone data — to assess how many visits were made to 250 office buildings across midtown, midtown south and downtown Manhattan in 2019, 2021 and 2022.

  • It found a big difference between visits to Class A+ buildings and the lower grades. Overall, average building visitation rates surpassed 60% of pre-pandemic baselines in 2022, compared to 48% in 2021.

Worth noting: A 10% increase in office occupancy could represent a potential return of 100,000-200,000 workers to the city’s office districts — each spending about $6,000 a year on everything from clothes to chopped salads, according to data cited by REBNY.

The intrigue: A separate widely watched report of office occupancy from Kastle, which relies on security swipe data, shows office occupancy in New York below 50% of pre-COVID levels.

  • Kastle also has been criticized as flawed because it isn't used by some of the city's largest developers.
  • In any case, Kastle doesn't parse its data to distinguish between building classes. "A single market-wide rate does not capture the wide variance in visitations," REBNY says in its report.
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