There’s excellent news for Manhattan office landlords: Physical constructing occupancy rose to 46.6% for the seven-day period ending Sept. 14, in keeping with the much-followed Kastle Systems Back-to-Work Barometer.
The post-Labor Day jump was a huge increase over Kastle’s tally of 38% from the previous week – and a quantum leap over the low 20s last winter.
However the news could be even higher than that. Although Kastle is widely cited because the oracle of office occupancy, its data are less inclusive than most market-watchers are aware. Due to that, the variety of employees back at their desks despite work-from-home and hybrid schedules might be higher than Kastle’s data suggest.
The sample of buildings where the safety provider counts entry swipes doesn’t include most of the city’s largest real estate empires, where tenants include more banks and financial-services firms than town average. The Wall Street firms have more employees at their desks than tech, creative and media firms.
Given the Kastle Barometer’s visibility – Realty Check has often cited its findings like the remainder of the true estate media — it’s hardly unfair to notice what the survey leaves out.
Kastle doesn’t cover properties owned or managed by Rudin Management, Silverstein Properties, Tishman Speyer, BXP (formerly Boston Properties) and Related Firms, in keeping with their representatives.
Of 40 Manhattan locations with over 34 million square feet owned or managed by town’s largest industrial landlord, SL Green, Kastle is present at just one recently acquired property.
Kastle’s security system is used to cite office occupancy in town, but its entry system shouldn’t be utilized by most of the city’s major office buildings.
Empire State Realty Trust doesn’t use Kastle on the Empire State Constructing or at most of its other large towers. The Durst Organization uses Kastle in nine buildings but not in its two largest, One World Trade Center and One Bryant Park.
Until last week, Kastle’s estimate of NY city office use hovered within the 30%-to low 40%-range. But its latest tally of 46.6% brought it closer to the 49% estimate last week by the Partnership for Recent York City. The Partnership’s data relies on estimates provided by 160 major employers.
Partnership President Kathryn Wylde, while noting that her organization’s findings “have been only a pair points off from Kastle through the pandemic,” said, “Our membership mix may obviously differ from theirs. We’re heavy on financial services, which is more present within the office than technology, for instance.”
Despite Kastle’s previous gloomy weekly snapshots, August saw more Manhattan leasing volume than in any month for the reason that pandemic began. The boom spilled into September with an almost 140,000 square-foot deal for Blue Owl Capital on the Seagram Constructing.
If Big Apple offices are as lonely as Kastle suggested, why do very smart firms proceed to sign leases?
There’s a second possible fudge factor as well. Kastle counts, not the central business districts of 10 US cities, but their “metro areas.” It seems the “NYC Metro” includes suburbs far beyond the Big Apple.
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We asked the Partnership why their numbers last week were 11 percentage points higher than Kastle’s. One reason was that the 2 organization’s measuring periods didn’t exactly coincide (the Partnership’s survey was based on employers’ estimates between Aug. 29-Sept. 12, while Kastle reported only the week ending Sept. 7).
But when the Partnership asked Kastle to make clear its sample, the safety firm told them it defines Recent York Metro “because the broader core-based statistical area, which incorporates Long Island, Westchester and other counties in Recent York, along with parts of Recent Jersey and Pennsylvania.”
When The Post asked Kastle representative Audrey Chang to verify that its sample included suburbs, she acknowledged by e-mail, “Yes, although the main focus is on Manhattan Class-A … based on trending details from greater than 200 buildings in Recent York City.”
Citing client confidentiality, Chang wouldn’t say which locations it does or doesn’t include in its data.
CBRE tristate CEO Mary Ann Tighe commented, “Of all the information I believe the Partnership’s are probably the most reliable because its members are a cross-section of town’s largest employers.”
Manhattan’s streets were jam-packed last week. Durst Organization spokesman Jordan Barowitz reported 75% occupancy on Sept. 13 across Durst’s entire, 13 million-square foot Manhattan portfolio. Insiders at Related say its Hudson Yards skyscrapers with eight million square feet are 60% full.
JLL tristate CEO Peter Riguardi laughed, “I equate this to while you have a look at your iPhone and it says it’s raining, but you look outside and it’s sunny.”