The 25-year office construction boom that transformed New York City's skyline has hit the brakes, driven in part by record office vacancies

The under-construction headquarters for JPMorgan Chase, center, rises in Midtown Manhattan.

Gary Hershorn/Getty Images

• Manhattan has had an enviable run in the construction of skyline-defining office buildings.
• But the opening of large office buildings in the borough will slow down after 2025, per The Times.
• Higher construction costs and the effects of increased remote work are playing a role in the shift.

New York City over the past 25 years has endured a multitude of unprecedented economic challenges, from the aftermath of the terrorist attacks on Sept. 11, 2001, to the ravages of the COVID-19 pandemic.

However, one thing has long remained a constant in Manhattan: the construction of large, skyline-defining office buildings.

But with many of the most ambitious office projects in New York City on hold for the foreseeable future, the city may not see a significant number of large office towers open their doors until the 2030s, according to The New York Times.

Per The Times, only a handful of large office buildings — which contain over 500,000 square feet — are set to open in 2024 and 2025. Beyond that timeframe, there are few projects on the horizon that would be completed by the end of the decade, according to the newspaper.

Driven by higher construction costs and heightened office vacancy rates, areas like Midtown Manhattan and Lower Manhattan, which have long been the nexus of operations for influential companies, are set to see a slowdown in the proliferation of large office buildings.

According to The Times, nearly 20 large office buildings proposed for construction have yet to see shovels in the ground to kick off the projects.

There's also the issue of signing anchor tenants to commit to occupying hundreds of thousands of square feet of office space.

One of the final centerpieces of the new World Trade Center complex — the long-planned 2 World Trade Center — has yet to commence construction as developer Silverstein Properties has so far been unable to find an anchor tenant for the building, per The Times.

For developers looking to sign a tenant to a large building, the market is simply not seeing large employers looking to move from their current spaces, according to the newspaper.

One World Trade Center, at center, in Lower Manhattan. Two World Trade Center, one of the final pieces of the new WTC complex, has yet to be constructed.

Gary Hershorn/Getty Images

Remote work has also chipped away at the need for some companies to have the sorts of large physical footprints that were once commonplace in Manhattan prior to the pandemic.

"It's hard to justify putting a shovel in the ground when you have supply-demand fundamentals that are out of whack," CBRE US Debt and Structured Finance president James Millon told The Times.

So in Manhattan, which for over two decades had seen construction cranes rising everywhere amid an influx of residents to the borough, the slowdown in office construction will have a significant impact on the local economy.

According to CBRE — the real estate services and investment company — over 52 million square feet of office space has been constructed in Manhattan over the past 23 years. The figure is a reflection of the confidence in New York City as one of the leading economic centers in both the US and the world.

But at the end of the third quarter of 2023, 17.9% of office space in Manhattan remained on the market, a record high, according to a report issued by the real-estate brokerage firm Colliers.

Many neighborhoods throughout the city are still recovering from the pandemic. And the slowdown in office construction threatens the city's ability to fund a range of services for residents, as property taxes from office buildings typically bring in big bucks to the city's coffers each year.

The new JPMorgan Chase Building, where the final steel beam was raised last month, is one such building that the city is touting as it affirms its continued status as a global business powerhouse.

Located at 270 Park Avenue, just a few paces from Grand Central Terminal in Midtown Manhattan, the 60-story building will serve as JPMorgan Chase's global headquarters and will be home to roughly 14,000 employees when it's set to open in 2025. The company in a statement said that 8,000 construction jobs — critical economic drivers for such developments — have been created as a result of the massive project.

And there's also the issue of office buildings being converted to residential housing, a major priority for housing advocates and lawmakers in a city starved for affordable housing. Manhattan has some of the widest income disparities of any jurisdiction in the country and many policymakers have rallied around housing conversions as a way to keep working-and-middle class New Yorkers in the city.

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