Office and other commercial buildings in New York have led the city’s 2024 real estate tax revenue to a record high even as these property types are still seeking a full recovery from the pandemic.
And with the office sector playing a critical part in New York’s financial health, a separate survey gave some hope that the return-to-office rate, which industry professionals have said is key to spurring office demand, may tick up.
Real estate taxes in the city totaled about $37 billion last year, representing 49% of New York’s locally gathered revenue, a study released Monday by trade group the Real Estate Board of New York found.
These tax revenues are expected to reach $40 billion this year, or about half of the city’s receipts from local sources, REBNY said, adding that the real estate industry has contributed a total of $429 billion, or an annual average of 51%, to the city’s tax revenue since 2010. REBNY’s study was based on data from the New York City Department of Finance, city comptroller’s office and the state Department of Labor, a REBNY spokesperson told CoStar News.
Even though the pandemic has upended the office market, the class of commercial properties that also includes retail, hotels and manufacturing remains the largest contributor to real estate-related tax revenue, REBNY said. A separate class involving multifamily housing with properties of more than three units also is a key contributor. These two groups of properties have accounted for 76% of the city’s property tax revenue from 2019 to 2024, according to the study.
“Commercial properties evolve, but still anchor New York City,” the study said.
New York’s office market value has exceeded its pre-pandemic level even as the vacancy rate sits at what CoStar data shows as a near-record high, according to a study last year by New York State Comptroller Thomas DiNapoli’s office. Growth in office market value was shown to be driven not by traditional midtown Manhattan clusters such as Midtown East, Grand Central and Times Square, but by the Hudson Yards megadevelopment on the far west side.
More office mandates
One in four employers in the city plans to increase office attendance requirements in the next 12 months, the Partnership for New York City, a high-profile nonprofit group whose members include major corporate giants, said Monday after polling more than 125 major Manhattan office employers in March. That suggests “office attendance should continue to increase” even as the remaining 75% of employers said their current workplace attendance policy is their “new normal,” the group said.
Fifty-seven percent of Manhattan office workers are at their workplace on an average weekday, up from 56% in May, according to the partnership. That translates to 76% of pre-pandemic attendance, up from 72% in May.
Some 36% of employees are back in the office four or five days, up from 28% in May, the partnership said. Three days in the office remains the most popular, with 30% of office workers doing that. Thirty-three percent of the city’s office employees remain fully remote or in the office just one or two days, the same percentage as May’s level.
Other studies have also showcased the return-to-office rate isn’t likely to see any sizable jumps, even though major corporate giants such as Amazon and JPMorgan Chase have called employees back to the office five days a week.
Among firms with more than 5,000 employees, 46% of employees are currently in the office on an average weekday, compared to 67% of employees among companies with fewer than 500 employees, the partnership’s study found.