{"id":14056,"date":"2023-03-11T13:00:35","date_gmt":"2023-03-11T21:00:35","guid":{"rendered":"https:\/\/essential.construction\/news\/nyc-office-hotel-sectors-show-signs-of-life\/"},"modified":"2023-03-11T13:00:36","modified_gmt":"2023-03-11T21:00:36","slug":"nyc-office-hotel-sectors-show-signs-of-life","status":"publish","type":"post","link":"https:\/\/essential.construction\/news\/nyc-office-hotel-sectors-show-signs-of-life\/","title":{"rendered":"NYC office, hotel sectors show signs of life"},"content":{"rendered":"

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NEW YORK CITY \u2014 Office and hotel activity are beginning to show signs of life in this city, but new construction starts will remain muted, according to a panel discussion during the 2023 New York Build Conference.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

\u201cThe important part of 2023 is that tenants are starting to have conviction with whatever [remote work policy] will work for them, and they are enacting it,\u201d said Nick Farmakis, vice chairman at London-based Savills, a real estate services company, during the panel session. \u201cWe\u2019re coming to a resolution now where the hybrid environment is here to stay. What\u2019s important is that there\u2019s conviction in the marketplace.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

In the office sector, most companies in New York City are operating under a hybrid schedule. For example, most audience members at the show head into their offices at least two to three times a week, if not more.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Harry Kucharczyk, portfolio director of commercial leasing at New York City-based WeWork, said the flexible officer provider\u2019s space in New York City is 72% leased, up from 60% last year.\u00a0\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

\u201cOur outlook is to double down on our key assets and start taking more space where we see opportunities,\u201d said Kucharczyk. \u201cMiami is a market, for example, where we\u2019re 95% leased.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Despite the upbeat outlook, economic headwinds threaten to carve a dent in the office recovery, according to Eric Jassin<\/span>, vice president of hotels and hospitality at Chicago-based JLL<\/span>, a real estate services company. <\/span><\/span><\/span><\/span><\/span><\/span>Interior office construction is active in the city, but Farmakis<\/span> says new office construction remains muted.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

\u201cOn the office side, tenants are deathly afraid of building because of the whole process,\u201d said Farmakis<\/span>. \u201cThe cost, the supply chain delays \u2014 I couldn\u2019t believe how long it takes to build a simple office.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

For instance, New York\u2019s Vornado<\/span> Realty Trust recently <\/span><\/span><\/span><\/span><\/span><\/span>hit pause on an 18 million-square-foot project<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> in midtown Manhattan. On the firm\u2019s most recent earnings call, Vornado<\/span> CEO Steven Roth said capital markets are \u201cmaking it almost impossible to build new.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Hospitality outlook<\/span><\/span><\/strong><\/span><\/span><\/span><\/h3>\n

Meanwhile, activity in the hotel sector is beginning to ramp up, according to Jassin.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

\u201cHotel business is busy,\u201d said Jassin. \u201cYou\u2019re seeing people in the city, airports, airport lounges, those kinds of things where travelers are coming in.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Yet Jassin said it\u2019s not clear whether the uptick is due to business or leisure travel. Some hotel owners reported that this recent rebound in travel is not enough to alleviate their default risks, <\/span><\/span><\/span><\/span><\/span><\/span>according to the Wall Street Journal<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a>.<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

Looking ahead<\/span><\/span><\/span><\/span><\/span><\/span><\/h3>\n

Financing remains a challenge for the industry, and \u201cprobably will be harder to get,\u201d said David Zwang, executive managing director at Toronto-based Colliers, a real estate services company, during the session. Last month, Associated Builders and Contractors Chief Economist Anirban Basu said that <\/span><\/span><\/span><\/span><\/span><\/span>contractors\u2019 outlook may dim<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> later this year as the cost of project financing continues to rise.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

The availability of new debt in the capital markets <\/span><\/span><\/span><\/span><\/span><\/span>has become a top issue<\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/span><\/a> for commercial development in 2023 and is still muting the strength of the recovery in the city.\u00a0<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n

\u201cNew York is back,\u201d said Farmakis. \u201cIt\u2019s just back in a different way.\u201d<\/span><\/span><\/span><\/span><\/span><\/span><\/p>\n<\/p><\/div>\n