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QUESTION

What does the Independent Budget Office forecast for the future of commercial real estate in New York?

5:01:39

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The Independent Budget Office (IBO) forecasts a continued growth in the value of Manhattan office buildings, albeit at a reduced rate compared to pre-pandemic levels.

The IBO does not expect a collapse in the Manhattan Commercial Office real estate sector.
Vacancy rates in office buildings remain high, but asking rents have not significantly decreased.
Annual growth in the value of Manhattan office buildings is anticipated to be around 2%, a decrease from more than 6% growth annually before the pandemic.

Justin L. Brannan

5:01:39

And just a question about commercial real estate.

5:01:42

What is IBO's what is IBO estimating for the future of commercial real estate in New York?

Sarah Parker

5:01:49

Good question.

5:01:50

Something people have been asking us lots of questions on.

5:01:54

So one of the things just to lead off, I view in our in our economic and in our tax revenue forecast, we are not anticipating a collapse in the real estate sector, in the Manhattan Commercial Office, real estate.

5:02:07

Particular.

5:02:09

Vacancy remains vacancy rates do remain elevated, but we have yet to see asking rents materially declined to date.

5:02:20

To be clear, the growth and the value of office space has notably slowed compared to where we were pre pandemic, and this is reflected in our forecast.

5:02:30

Ivy was estimating about a 2% annual growth rate in the value of Manhattan office buildings.

5:02:36

And this well, it is growth is much lower than where we were around 6% more than 6% growth annually pre pandemic.

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