New York Tech Tenants Power COVID-19 Era Economy
21 May 2020
The response to the COVID-19 pandemic has prompted a shift in the way people are working and living as technology companies provide services that enable decentralized working, shopping, education and entertainment, according to a new MarketFlash by CBRE, the global leader in commercial real estate services.
While job postings in the New York area fell by 17.7% year-over-year in April, listings for positions in the technology industry were up 25.2%, according to Glassdoor’s New York City Job Market Report. Despite job losses at tech companies with transportation and hospitality-focused platforms, many firms involved in the “remote revolution” are continuing to grow headcount as the larger economy contracts.
“Despite the obvious and unavoidable hardship that many companies are faced with right now, the tech industry appears well-positioned to weather the economic storm and lead the next growth cycle by capitalizing on new business and consumer preferences that facilitate today’s ‘new normal,’” said Sacha Zarba, Vice Chairman in the Midtown office of CBRE who specializes in tech firms.
The migration of information to the cloud and proliferation of cloud-based software is spurring increased demand for office space. Cloud computing firms signed 19 new leases totaling over 560,000 sq. ft. in Manhattan between Q1 2019 and Q1 2020. As businesses rely increasingly on a remote workforce and migrate information to the cloud, cybersecurity is another bright spot with room to run. Firms in that sector signed 16 new leases for over 200,000 sq. ft. during the same period.
E-commerce is another sector with the potential to be a growth engine during the next cycle. Companies in that sector have also expanded in New York over the past year, signing 12 leases for over 525,000 sq. ft. of space. In addition, streaming services companies have signed leases for just over 176,000 sq. ft. of space and distance learning resources are also having their moment, signing seven leases encompassing roughly 87,000 sq. ft. of space in Manhattan in the past year.
“While we are forced to conduct so much of our daily activity from home, we’ve come to rely on a host of technology tools – and NYC is home to a growing roster of firms that have enabled this activity,” added Nicole LaRusso, Director of Research & Analysis, CBRE New York Tri-State. “We will eventually get back to our offices, schools and shops, and many of the technology tools that we’ve become so comfortable with during this period of social distancing will continue to embed themselves in our lives. The firms that create these technologies will continue to grow and NYC will continue to be the beneficiary of that growth.”
Communications technology companies that allow workers to connect over chat, video and shared documents have also signed eight new leases for 51,349 sq. ft. between Q1 2019 and Q1 2020.
CBRE Group, Inc. (NYSE:CBRE), a Fortune 500 and S&P 500 company headquartered in Dallas, is the world’s largest commercial real estate services and investment firm (based on 2021 revenue). The company has more than 105,000 employees (excluding Turner & Townsend employees) serving clients in more than 100 countries. CBRE serves a diverse range of clients with an integrated suite of services, including facilities, transaction and project management; property management; investment management; appraisal and valuation; property leasing; strategic consulting; property sales; mortgage services and development services. Please visit our website at www.cbre.com.