City’s office buildings have lost almost $30B in value, comptroller says

Natalie Sachmechi

Crain's New York

Oct 7, 2021

The overall value of the city’s office buildings took a $28.6 billion beating in the past year, marking the first time their worth has declined since 2000, when the state comptroller’s office began tracking the data.

Between 2011 and 2021, the market value of office properties more than doubled, to $172 billion, but it took one pandemic year full of remote work and uncertainty to cut it down nearly 17%, to a little more than $143 billion, Comptroller Thomas DiNapoli’s latest report said.

Since July 2020 the city’s 10 most expensive properties overall have lost 12.5% of their value, according to the data. The World Trade Center declined 23%, and the General Motors Building in Midtown and the Bank of America Tower by Bryant Park both received a 16% haircut from their pre-pandemic values.

That’s not just bad news for office landlords. Taxes from the buildings make up 54% of the city’s property tax revenue, which declined by $1.7 billion between July 2020 and July 2021. Low occupancy rates and decreased income from tenants lead to a lowered market value. As a result, tax bills, which are based on market value, also shrink.

The biggest threat to property taxes is the widespread adoption of remote work, which keeps people out of their offices for a majority of the workweek.

“Without people, you don’t need space,” Deputy Comptroller Rahul Jain said. “It’s a hefty sum of money we just lost. It’s going to take a few years to build back.”