Q&A
Manhattan office vacancies and long-term impact on property taxes
7:29:23
·
121 sec
Council Member Brewer inquires about OMB's expectations for the Manhattan office market and its impact on property tax revenue. Director Jiha provides insights on their conservative projections and potential mitigating factors.
- OMB projects peak vacancy rate of 23%, staying above 20% over the financial plan
- Conservative estimates assume high vacancy rates for at least 4 years
- New state laws for office-to-residential conversions may help reduce supply and create affordable housing
- Property tax, as the largest revenue source, is a significant concern for the city
Gale A. Brewer
7:29:23
Okay.
7:29:24
In terms of Manhattan office vacancies, what shift does OMB expect in the office market over the long run, and how would these shifts impact the tax role for property tax?
7:29:36
And obviously, I know how your forecasting goes.
7:29:39
Do you think a peak of a 23% vacancy rate is a conservative estimate, and how much risk do you think there is in the vacancy rate we're obviously concerned about in the future?
Jacques Jiha
7:29:50
Yeah.
7:29:50
This is, this is something that occupies a lot of our time, because as you can imagine, property tax is the largest source of revenue for the city.
7:29:59
And right now, we are trying to be, from our perspective, very conservative in in a sense of we're assuming that we're gonna pick up 23% and then stay above 20% over the life of the financial plan.
7:30:11
You know, we, we're hoping that all the new laws that, were enacted by the state would help us in term of the conversion.
Gale A. Brewer
7:30:21
But the yes.
7:30:22
Yes.
7:30:22
Yes.
Jacques Jiha
7:30:22
Yeah.
7:30:23
In term of the conversion.
7:30:24
Also, opposite in in Albany in term of the conversion, because that would basically remove some of the supply from the marketplace, at the same time allows, give us the opportunity to convert many of these units into affordable housing.
7:30:39
So we're hoping that that's going to help.
7:30:41
But, so far, we our long term forecast is we're going to be in this for quite some times until we see some significant changes in term of the, you know, as you see a new trend in the marketplace.
7:30:56
But right now, we're still conservative.
7:30:58
We're looking at, 22% and sometimes something around 20, 21% in the out years.
Gale A. Brewer
7:31:04
So you'd like 2 or 3 years?
7:31:06
Is that your estimate when you say long time?
Shekar Krishnan
7:31:07
I'm talking
Jacques Jiha
7:31:08
about the financial plan, talking about 4 years right now.
7:31:10
You know?
7:31:11
But we don't have any reason to believe even though I still believe that New York New Yorkers are so creative and so dynamic, we're gonna find a solution to this problem.
7:31:20
But in the short term, within the time of the financial plan, I don't see it is gonna happen that quickly.
