COVID-19 Has Dramatic Economic Impact On Lower Manhattan Real Estate Activity
Nearly a year after COVID-19 arrived in New York City, Lower Manhattan, like many central business districts across the country, has felt a set of profound economic impacts from the global health crisis. The pandemic has left the district with a significant number of offices emptied, tourism stalled and many residents relocated, temporarily or permanently, according to the Alliance for Downtown New York’s 2020 Lower Manhattan Real Estate Market Year In Review.
“By the numbers, the short-term economic impact of COVID-19 is deep and troubling. We are doing what we can at the Alliance to help our struggling businesses keep the lights on and look towards a better day,” Jessica Lappin, President of the Alliance for Downtown New York said. “This past year, we focused on awarding grants, promoting our storefronts, helping businesses move online and transform their physical spaces to meet new COVID regulations. While it’s still too early to say exactly what the lasting effect will be on Lower Manhattan, there are reasons for hope on the horizon. We’ve seen this neighborhood overcome obstacles time and time again.”
Read the full 2020 Lower Manhattan Real Estate Market Year In Review report.
Prior to the onset of the pandemic, Lower Manhattan office leasing had reached an all-time high with promise for continued momentum. That success came to a crashing halt as Lower Manhattan recorded nearly 70% less leasing year-over-year and marked the lowest annual total on record with 2.25 million sq. ft. of office space leased in 2020. Office vacancies, compounded by a sharp rise in sublet spaces, hit a 20-year high at 13.7%. Only 10% of office-occupying workers in Manhattan returned to their desks as of year’s end, with the majority primarily opting to continue working remotely.
Both retail and hospitality businesses in Lower Manhattan were hit hard by the initial shutdown in March (about 75% were temporarily closed) and the subsequent decline in tourism. As a result, three hotels and over 160 retail businesses, or 12% of the total, permanently closed, ranging from institutional department stores and buzzing restaurants to a litany of small businesses like nail salons, dry cleaners and coffee shops.
Amid a difficult year, some notable developments included the expansion of the city’s Open Streets program to include Pearl Street, a new dedicated bike lane on Broadway and the announcement that the Brooklyn Bridge will convert a vehicular lane to bicycle-only use. There was also significant growth in outdoor dining, as businesses evolved to meet demand. Currently, about 140 Lower Manhattan restaurants offer al fresco dining in everything from curbside yurts, mini greenhouses to heat-lamp flocked benches.