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State Street, a $12-billion banking and financial services firm with $3.5 trillion under management, is vacating its two offices in midtown Manhattan as it allows employees to work from home much of the time.
The change frees about 500 employees from a daily commute, CNN Business reported.
The company is adding a shared workspace in Manhattan and giving its workers access to existing offices in New Jersey and Stamford, CT.
“To accommodate our hybrid workforce, we [are] ensuring that our realty needs are in line with where our employees will be working,” the company said in a statement.
“Our NYC-area employees, including members of our global executive leadership team who call New York home, have welcomed and are embracing our hybrid working model,” which was revealed to workers in May, the company’s statement said.
TRENDPOST: State Street is the latest in a growing cadre of companies, including Facebook and Twitter, opting to give up lease payments and call the Internet their new office.
Clearly, not all companies are surrendering their New York office space; JP Morgan Chase and Morgan Stanley, which are invested in commercial real estate and/or hold massive loans on commercial properties, already have ordered their desk jockeys to come back downtown.
However, as we reported in “New York Office Vacancies Set Record” (Trends Journal, 13 July 2021), a third of leases in many large Manhattan office buildings will expire over the next three years, real estate services firm CBRE says. Many of those tenants have already announced that they will need much less office space, according to the New York Times.
Also, new buildings that began construction before last year’s crisis will soon be completed, adding 14 million more square feet of offices at a time when several companies have announced plans to move out of town. (See “U.S. Financiers: Bye, Bye Wall Street,” Trends Journal, 2 February 2021.)
TREND FORECAST: We continue to see a bleak future not only for office landlords, but also for the shops, bars, restaurants, salons, and other businesses that form the economic ecosystems that depend on commuters.
In cities with commuter-based economies, such as New York and San Francisco, tax revenues will slide as office buildings lose their value. These cities now face a choice of shrinking services and degrading residents’ quality of life, or entirely reinventing themselves and their revenue streams.