NYC Planners to Study Hybrid Work Impact on Manhattan Economy

 NYC’s Department of City Planning is launching a two-year study into the impact of hybrid work patterns on the local economy, contracting with Placer Labs to develop methodology—including the collection and analysis of cell phone data.

The cell phone data will be deployed to analyze consumer spending habits in business and office districts. City Planning also will be hiring a full-time analyst and consulting contractors to study the impact of hybrid work as well as regional transportation trends, Crain’s reported.

The study is set to launch in July with $500K in funding from the federal Highway Administration and the US Department of Transportation. NYC officials did not disclose how they intend to collect the cell phone data they’ll be analyzing.

City planners decided to conduct the two-year study after Bloomberg released a Stanford University analysis earlier this year that said that the split personality of Manhattan’s office market—bustling on Tuesday, Wednesday and Thursday, emptying out on Friday and Monday—is costing Manhattan businesses that depend on foot traffic from office workers an estimated $12B a year.

Using the US Census Bureau’s 2019 estimate of 2.7M daily commuters in Manhattan as a starting point, Stanford’s economists calculated that the average worker is spending an inflation-adjusted $4,661 less per year on meals, shopping and entertainment near their NYC offices.

The reduction in foot traffic has sent NYC’s subway system into a financial “free-fall,” the report said, with weekly ridership averaging only about 60% of pre-pandemic levels.

The researchers modeled an eventual 40% drop in office market values in Manhattan as towers sit partially empty, which they estimated would cost about $5B annually in tax revenue, about 5% of NYC’s budget.

The most reliable measure of office occupancy thus far has been Kastle System’s Back-to-Work Barometer, a weekly survey based on entry-card swipes in 10 major US markets.

Critics have noted that some of the biggest office landlords in NYC—including Vornado and SL Green—do not use Kastle’s security system. But based on the barometer’s track record in the past twelve months, it appears to have hit the target:

In June 2022, Kastle—after branding itself as the herald of what would be an inevitable return to the office—abandoned rose-colored language in its weekly reports and declared that a 43% 10-city average for office occupancy was “the new normal.”

In January, when the barometer pushed up past 50% for the first time since the survey started, Kastle didn’t call it a trend: the barometer has hovered around 49% for the past five months.

In Kastle’s latest report, issued on Wednesday, NYC’s occupancy level stood at 48.5%, while the 10-city average remains stuck at 49%.