There was a time when tenants had to fight for office space in New York City's most sought-after districts. But then the coronavirus outbreak exploded, and suddenly, everything changed.
When the pandemic first broke out, employers were quick to have their staff revert to remote work. At the time, many thought that arrangement would be temporary, lasting weeks or months. A year later, many workers are still doing their jobs strictly from home, which means many office buildings are sitting vacant.
In fact, at the end of 2020, Manhattan office vacancies sat at 15.1% -- a big jump from 11.1% in 2019 and the highest vacancy level on record since 1999. All told, that left 68.4 million square feet of space empty.
In light of all of this, commercial landlords are growing increasingly desperate to get bodies back into their buildings. And some are hoping that scaling up coronavirus testing will be the ticket in that regard.
Will an uptick in testing help revive office buildings?
A report from Kastle Systems revealed that as of mid-February, only 14% of employees had returned to New York City offices. It's no wonder, then, that commercial landlords have become increasingly willing to foot the bill for more coronavirus testing. The logic: By making testing quick, easy, and accessible to workers, it can pave the way to a swifter return to the office.
But will this strategy work?
The reality is that while it may help a little, an effective coronavirus vaccine rollout will have a much greater impact on when and how workers are able to return to the office safely. Though coronavirus testing has improved in the course of the past year, it still isn't foolproof. A person can test negative for COVID-19 one day, only to register a positive test result the following day after having potentially infected a host of people. As such, offering on-site testing may be a nice perk to offer tenants in theory, but it may also constitute a waste of precious resources.
In fact, a better bet for commercial landlords may be to try facilitating on-site vaccinations for tenants once eligibility opens up. President Biden has already proclaimed a coronavirus vaccine should be available to any American adult who wants one by early May. But so far, scheduling vaccine appointments has been a trying process, and once eligibility expands further, it's apt to become even more difficult to find an appointment. At that point, commercial landlords have a real opportunity to make those shots more accessible to office workers -- and, ideally, help companies achieve internal herd immunity sooner.
The Millionacres bottom line
Many New York City office REITs (real estate investment trusts) have taken a beating over the past year, and investors may, at this point, be giving up on office buildings. While offering coronavirus testing is useful to a limited degree, it may not do the trick in helping offices recover. Offering vaccines, on the other hand, is a whole different ball game.