Thanks, office workers. Foot traffic in Manhattan nears pre-COVID levels, report says

Moritz Masberg, an attorney in Midtown, shows up daily in his Sixth Avenue office, along with about a third of his coworkers. He says he senses a promising trend.

“The lunch places are full, and I don’t see many empty stores anymore,” Masberg said. “I think that the city recovered quite well here in Midtown.”

New data from the market research firm Placer.ai suggests he’s onto something. Foot traffic in Manhattan office buildings in July reached its highest level in four years, according to the firm, whose widely cited analyses are used to inform commercial real estate and business decisions across the country.

While office visits nationwide reached 72.2% of pre-pandemic levels, the rebound in New York City and Miami led the nation, with both regaining 90% of their July 2019 foot traffic, according to Placer.ai. The company’s Office Building Index analyzes cell phone “ping” data at more than 77 commercial office buildings, and commercial office buildings with first-floor retail, according to the firm.

“Employers from local governments to major corporations are tightening their return-to-office (RTO) policies – cracking down on practices like coffee-badging and requiring employees to relocate closer to the workplace,” Placer.ai’s Lila Margalit wrote in the report announcing the July findings. “Coffee-badging” is where office workers clock in and stay only long enough to enjoy a cup of coffee before departing.

The findings are a glimmer of good news for restaurants, retailers and other merchants who rely on spending by office workers to thrive. But they also counter some grim, pandemic-era forecasts that telecommuting and hybrid work would spell doom for New York’s and other cities’ business districts, reducing real estate values, sapping business profits and tax revenues, and ultimately forcing deep cuts in services. The data negates part of that so-called “doom loop” scenario.

“Office building visitation has inched its closest yet to pre-COVID norms,” Keith DeCoster, vice president of Research at the Real Estate Board of New York, said of the July analysis from Placer.ai. “This is a welcome result not only for office properties but the thousands of retail businesses and the transit system that depend on daytime commuters.”

Signs of continuing recovery – and struggle

There are other signs of a city bouncing back. Danny Mangru, the U.S. Office Lead for Market Intelligence at commercial real estate consultancy Avison Young, said leasing activity in the first half of 2024 was up “almost 20%” across Manhattan, compared with the first half of 2023.

And Brad Lander, the New York City comptroller, said in a May report it “now seems unlikely” the city would experience an economic doom loop.

“Occupied space is down approximately 6%, rents are only down about 7% and trending up, and assessed values & tax levies (which were feared to be trending down toward a 40% drop in the ‘doom loop’ scenario) are trending up,” the report said.

But Lander also pointed to continuing weakness, writing that the “seismic, pandemic-driven shift toward remote work has substantially pushed down demand for office space, approximately doubled the vacancy rate, and adversely affected rents and market values, presenting a range of serious challenges.”

“New York City’s office market remains slack,” Lander’s report said.

Stijn Van Nieuwerburgh, a Columbia Business School professor who gained notoriety for warning of an “urban doom loop” in 2022, said gauging how well the city’s office recovery is going can yield wide-ranging results, depending on which analytic tool was employed.

He said that while Placer.ai measures cell phone ping data at buildings across the country, data from another source, Kastle, is compiled by measuring “unique turnstile swipes” at 200 buildings in New York.

The data from Kastle, he said, showed that in June 2024, in-person office attendance in New York City was up 6% from one year earlier, 25% higher than two years earlier and 142% higher than it was in 2021.

Meanwhile, data from XYSense, which he said “uses 41,000 sensors placed in offices worldwide to measure actual usage of office space,” indicated “the start of 2024 has seen a substantial jump in office attendance” nationwide.

Jesse Kent, a spokesperson for Placer.ai, declined to provide more detail about the firm’s analysis of the picture in New York City. Nonetheless, the findings resonate with users.

James Mettham of the Flatiron NoMad Partnership said using Placer.ai data, his organization learned that 3.8 million workers had visited the Midtown South area in the second quarter of this year, a 42% increase from 2022 and approximately 70% of pre-pandemic levels.

He said the data, along with other data gleaned from sources such as Kastle, CitiBike and the MTA, was critical to existing companies seeking to expand as well as those considering whether to open a business in the area.

“They want to know how many people are walking outside their storefront. They want to know demographics. They want to know proximity to other workforces, student populations and all that,” said Mettham.

Still, another group’s findings suggest that office activity has marginally declined. Based on a survey of 130 large employers conducted in May – the latest data – the Partnership for New York City, a pro-business group, found that 56% of Manhattan office workers “are at their workplace on an average weekday,” down from 58% in September 2023, and 78% prior to the pandemic.

The view from the street

For businesses that depend on foot traffic, the outlook can vary significantly depending on one’s baseline.

Willy Hanf, a street vendor who has operated a cart from the same corner at 53rd Street and Sixth Avenue for the past 14 years, declared business was “good” – but on further reflection acknowledged it remained “down 20%” from its pre-pandemic levels.

Much of that lost business he attributed to missing office workers. Without tourists, Hanf said his business would’ve suffered even more. Even still, the city’s office workers – when they are in the office – are an important economic engine.

Each additional day on average that regional employees work from home each week could result in as much as a $1.6 billion reduction in annual spending on daytime trade such as lunch and after-work drinks, according to a 2022 joint city and state government report.

Stuart Saft, a lawyer who heads the New York Real Estate Practice Group at the Holland & Knight law firm, said he requires everyone in his group to be in the Midtown office four days a week, arguing that ultimately, it results in better work.

“If you’re in a profession that requires collaboration, then you really need to be in the office,” he said.

Saft said the city feels measurably less busy, judging from the ease in getting a same-day restaurant reservation or a cab. Prior to the pandemic, he said, it wasn’t unusual for him to walk from his Midtown office to his Upper West Side home, because there were no available cabs. “It is significantly quieter,” he said.

Brittany Bentson, who works in insurance out of a Midtown office, said she enjoyed the looseness that came with a hybrid work schedule and the benefit of being able to spend more time with her family. Still, she said the very nature of her job had changed. Instead of gathering over drinks or dinner, as was the case in the past, she said client meetings had shifted to the occasional lunch, if that.

“I work in an industry where you entertain and it often is hard to find time,” said Bentson, “People are just not coming into the city as often, or when they do come into the city they’re leaving right at the end of the day.”

Saft, Brooklyn-born and raised in Queens, said he remained “very concerned about the future of the city” and felt it was imperative to bring workers back, in part by making the city more affordable to live in.

“There’s a chance that you could really change what New York is all about,” he said. “New York City is a gift that has been given to us from prior generations.”