The Empty New York Office

To update yesterday’s post about the New York endgame, I report two stories, one from the Financial Times via Zero Hedge, the other from The New York Post. Admittedly, as the Post explains, there is some good news on the commercial real estate front, but still New York is in deep trouble.

The first story concerned Deutsche Bank. It is currently preparing to move more of its staff to Jacksonville, Florida, of all places.

Zero Hedge has the story:

As Deutsche Bank continues with the biggest blood-letting on Wall Street since the collapse of Lehman Brothers, managers are reportedly planning to move thousands of Manhattan-based associates, often those with the most important front-office-type jobs in sales and trading.

Ever since DB moved to expand its presence in the Americas during the late 1990s-2000s, thousands of young employees, from interns to first-year analysts, have flocked to places like Murray Hill and other parts of Manhattan to work at the city's investment banks, and generally live the young banker lifestyle of late nights out at bars on the lower east side and hooking up with wannabe model types at the clubs and bars that dot (or rather, once dotted) the East Village and the LES.

In the post-COVID era, many of these analysts might be sent to other more cost-effective parts of the country where Deutsche Bank already has a "presence", according to DB Americas CEO Christiana Riley, one of the highest-ranking women on Wall Street.

Riley told the FT that the NY head count could "conceivably" be cut in half in 5 years (a pretty aggressive time table). The bank currently has roughly 4,600 staff in Manhattan, which means some 2,300 could soon be reporting to DB's offices in Jacksonville Fla., long considered a dumping ground, where the bank houses its compliance department. According to media reports, the bank's compliance workers in the city have long been treated "lower than janitors" by a bank that's become almost synonymous with criminal malfeasance (an impression that has only been strengthened, as unfortunate or undeserved as that might be, by the endless MSM reporting on the bank's lending relationship with the Trumps.

The FT specifically cites the Jacksonville office, along with another office in Cary, North Carolina, as likely destinations for these displaced workers. The British paper also noted that NYC has been  losing financial services jobs to cities like Dallas and Tampa for years, but that the pandemic, with its radical experiment in remote work, will likely accelerate the process.

As noted yesterday, there’s more to it than the pandemic.

Anyway, Steve Cuozzo reports for the New York Post on New York’s emptying office towers:

It’s scary to think about, but Manhattan’s office-leasing picture is worsening by the month. The large, spirits-lifting deals signed in the spring and summer for AIG, TikTok and Facebook seem a distant memory.

CBRE’s latest activity report found that year-to-date leasing of 11.87 million square feet was down 58 percent over last year. Things took an even darker turn in November, when leasing totaled a mere 482,000 square feet — a staggering 78 percent below the five-year monthly average of 2.16 million square feet.

The pitiably puny numbers broke the record for lowest monthly leasing for the third time this year. “I wouldn’t say it’s free-fall, but it’s a lot worse than just an adjustment,” said a broker who wisely didn’t want to be named. He quickly added, “We’ll recover, but it won’t be overnight.”

Among the CBRE report’s other highlights, if they may be called that:

Suffering Midtown South and downtown saw November’s five-year monthly average off by 94 and 90 percent, respectively.

 In Midtown, sublease additions to the market drove a decline in asking rents down to $83.07 per square foot, versus $84.16 in October and $87.03 in November 2019. The largest new block of Manhattan sublease space was 206,000 square feet by S&P Global at 55 Water St. downtown.

To be fair, Cuozzo reports on some good news in some other neighborhoods. Shops are being leased in the West Village, on Bleecker St.

But still… the news is decidedly grim.