Are you searching for indications that the U.S. economy can continue to avoid a recession? Then divert your attention away from commercial real estate. The office buildings in the city are facing difficulties. For the past hundred years, these towers have relied on two main factors. Firstly, workers occupying the buildings throughout the week. Secondly, a steady flow of money in the form of loans for borrowing, purchasing, and constructing. However, those days are now behind us. As hybrid work becomes more prevalent and transitions from a trend to the new norm, office occupancy rates have reached record lows. Simultaneously, interest rates have surged to unprecedented heights. And now, the time has come to repay the mortgage: $1.5 trillion in commercial real estate loans will expire within the next two years. This situation is enough to make one reconsider the future of cities. We extensively explored Manhattan, engaging in conversations with both major and minor players in this industry that has been severely shaken.
What would New York City be without its iconic skyline? These structures are symbols of commerce, standing tall and united. The city boasts more office space than any other city in the world. However, if you were to take a closer look inside all these towering properties, a fundamental question arises: Where is everyone? Currently, over 95 million square feet of office space in New York City remains unoccupied. To put it into perspective, this is equivalent to the space of 30 Empire State Buildings.
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