The number of office workers in New York City reached a record of 1.5 million in 2016 with office space reaching 550 million square feet amid the largest employment expansion in the city's history, according to a report released today by State Comptroller Thomas P. DiNapoli.
"New York City's office properties are an important part of its economy, attracting businesses and workers from around the world," DiNapoli said. "Demand has been strong. Millions of square feet of new office space has been developed, and millions more are in the pipeline. In recent years, job growth has met the increase in office space, but job growth has begun to slow. The time needed to fill the additional space will depend on the future pace of employment growth."
Since the end of the Great Recession in 2009, the city has added more than 620,000 jobs. During that time, those employed in office settings have grown by 15 percent, or 202,000 jobs. Together, the business services sector (which includes accountants, lawyers and administrative employees) and the technology, advertising, media and information (TAMI) sector accounted for 87 percent of the growth in office jobs. Office jobs now account for 1.5 million, or approximately one-third, of the city's 4.3 million jobs.
The terrorist attacks on Sept. 11, 2001, destroyed 13 million square feet of office space at the World Trade Center complex. Over the following decade, the redevelopment of Lower Manhattan and new construction elsewhere in the city replaced the space that was lost on that day. Since 2001, 38 million square feet of space have been added with more than half added in the past five years alone, according to data from Jones Lang LaSalle.
In 2016, office space in the city reached 550 million square feet. The city's three main business districts (Midtown, Midtown South, and Downtown Manhattan) together contain 450 million square feet of office space, three times more than in Chicago (which is ranked second nationally) and twice as much as in London (which is ranked second internationally).
The demand for office space has lowered the vacancy rate in Manhattan from 12.8 percent at the end of the recession (2009) to 9.7 percent in 2015. The vacancy rate edged up to 10.1 percent in 2016 as new space came on the market at a faster rate than it could be leased. Rental rates have risen steadily since the recession, increasing by almost one-quarter (to $71.70 per square foot). This has raised the value of existing buildings and spurred new construction and renovations.
Based on data provided by the New York City Department of Finance, the total market value of office space in the city reached $168 billion in city fiscal year (FY) 2017, an increase of 179 percent since FY 2000. More than half of that growth has occurred since FY 2009.
Two-thirds of all economic activity in New York City ($550 billion in 2015) occurs in office buildings. DiNapoli's office estimates the city collected a record $5.8 billion in tax revenue (largely the real property tax) from office buildings in fiscal year 2016, nearly 11 percent of all tax revenue. Collections increased by 56 percent between fiscal years 2010 and 2016, compared to a 43 percent increase for all other tax revenue.
The Comptroller estimates that office-related tax collections will reach more than $6 billion in FY 2017. Continued growth in market values and new construction will drive property tax collections through the rest of the decade.