Midtown and the Financial District might just look a little busier lately.
The citywide office vacancy rate fell in the first quarter of the year to 14.5%, its fourth straight quarter of decline, according to the latest report from the New York City Economic Development Corp. It was 14.6% in the fourth quarter of 2024. Office leasing activity inched up to 91.4% of its prepandemic level.
With more companies taking office space, another sign that office workers might be commuting in more is that subway ridership reached 75.4% of its prepandemic average, according to the EDC report.
The numbers in part reflect a recovering city labor market. Overall, the city added 2,500 jobs in March, although the greater metropolitan area shed 8,300. Both regions have seen year-over-year job growth, however, with a 1% increase in metro-area jobs coupled with a 1.5% increase in city jobs.
In total, the city has more jobs now than it ever has, the report found, at 4.8 million.
The city has seen strong job growth in high-wage sectors that often require office space, said Melissa Pumphrey, senior vice president of economic research and policy at EDC. For example, the finance and insurance sectors have 24,000 more jobs now than they did prepandemic, while the professional services sector has added about 16,500, according to the report.
“The labor market is still very strong in New York City as well as in the surrounding metro area, and that’s a big component of what we think is driving office demand and the improvement in office market conditions that we’re seeing,” Pumphrey said.
Even though the office vacancy rate is improving with the labor market, it’s still nearly double its prepandemic average, as more companies have embraced hybrid and remote work.
Kastle Systems, a security firm that measures key swipes in the buildings where it provides services, put the rate of workers returning to the office at 53.8% in the four weeks ending April 16, down 0.7 percentage points from late February and early March. However, return-to-office measurements from the Real Estate Board of New York, which uses location data, was rosier for landlords, showing a one percentage point improvement from January to February to 67% occupancy.
The EDC report also found that the total unemployment rate improved from the last quarter of 2024, dipping to 5.1%. And the unemployment rate for Black New Yorkers finally dropped below its prepandemic average, falling to 8%.
