Reopening Offices Will Be Hardest In New York, The Dense Pandemic Epicenter

When it comes to moving past this crisis, no office market in the country faces a taller task than building owners in New York City.

Not only has the city become the global epicenter of the coronavirus outbreak, with more than 17,000 dead statewide as of Wednesday, but the city's densely packed, multi-tenant skyscrapers mean owners and occupants face extra logistical puzzles in the move to a successful reopening. 

As landlords and tenants begin to make plans for their office spaces on a longer-term basis, a host of questions over the best, safest course of action — and, crucially, who will bear the costs — are emerging with no definite answers.

“People are dealing with financial shock … it’s not like there is lots of cash to go around,” said Stephen Cassell, a principal architect at Architecture Research Office and an associate professor at Columbia University.

Cassell works with businesses on their office build-outs, but right now, most of his work is helping clients figure out how they can create more space between employees. 

Moving toward touchless design, closing spaces where people congregate and changing air filters are all options companies are examining, he said. But the key element comes down to the one thing that is proven to work combating this virus: creating distance between humans.

“If you are going to de-densify you could just say, ‘Half the people will come in during the morning and half in the afternoon,'" Cassell said. "It’s not a problem that many businesses can throw money at by leasing more space.

Generally, the businesses he works with are expecting to bear the cost for some of their own changes and landlords to handle building-wide adaptations, Cassell said.

The city remains in the grip of the virus, but most building owners are focused on May 15 as the possible time for workers to begin tricking back into buildings, said CBRE Senior Managing Director Tom Lloyd. He leads property management for roughly 100 buildings in the city, including Nuveen’s 733 Third Ave., Fosun’s 28 Liberty and Savanna’s 5 Bryant Park.

He said screens at reception, increased sanitation, markings on floors to promote distancing and touchless elevators are now part of the conversation among building owners in the immediate short term. But many are looking at what kind of legislative changes and mandates may be ahead.

“One thing we don’t know what government will require ... the Department of Buildings may make hands-free lavatories part of the building code," Lloyd said. "You just think of what kind of legislation could benefit the world of office buildings. Look what happened after Hurricane Sandy — building codes changed quite extensively." 

Gov. Andrew Cuomo said Tuesday that a reopening of the state will be done region-by-region and can start as phased-in process once there has been a 14-day decline in the region's hospitalization rate. The first phase will feature construction and manufacturing, which Cuomo said are lower risk.

Tishman Speyer CEO Rob Speyer, Real Estate Board of New York President James Whelan, Rudin Management CEO Bill Rudin and RXR Realty CEO Scott Rechler are some of the real estate players advising the governor on the reopening plan, The Real Deal reports.

Meanwhile, REBNY is working alongside the state to formulate guidelines for office reopening. A representative for REBNY told Bisnow there are no guidelines to be announced as yet.

Still, the owners of some of the city’s skyline-defining office buildings have been publicly outlining what changes they are making to allow for a return to work. Edward Piccinich, the chief operating officer of SL Green, which plans to open its 1,400-foot-tall office tower One Vanderbilt later this year, told investors last week the company was “looking forward to ramping up operations as soon as this mandate is lifted.”

SL Green has been examining algorithms on elevators and ramped-up signage in corridors, all with the goal of managing the flow of people through public space. It has also looked at using thermal scanners, he said, and pointed out that they have been successfully used at SL Green construction sites.

“I am confident that when the tenants return to our buildings and we get full occupancy, there will be a continued improvement in the way we do things,” Piccinich said on SL Green's earnings call. The company declined to comment further.

Related CEO Jeff Blau told Bloomberg last week that Hudson Yards office buildings will have staggered start times and workers will be told to wear masks when tenants return. 

Related Vice President Jordan Bargas said in an interview with Bisnow that the company expects that it will be a “phased-in” return to work at Hudson Yards buildings, and pointed out the fact that the buildings are so new — all have opened within the last two years — many of the touchless design elements and state-of-the-art filtration devices were already in place.

“If you are in an older building, it would be more of a scramble,” Bargas said.

Columbia Property Trust CEO Nelson Mills, whose publicly traded REIT owns 249 West 17th St., where Twitter has its New York City headquarters, predicts most buildings will be empty well into the summer.

CXP has been focused on trying to listen to its tenants, he said, and has sent out a questionnaire asking them what they want to see at the buildings. The firm is seeking feedback on how visitors are handled and how packages are delivered and cleaned, among other topics.

Like SL Green, Columbia Property Trust has been using temperature scanners at construction sites, but Mills is not sure if it would work for the company's office portfolio. Above all, finding a set of rules and protocols that suits a diversity of tenants is a complex challenge.

“The concrete things, spacing … security protocols in buildings that are ours, those are things we can control,” CXP Senior Vice President of Asset Management and Leasing Paul Teti said. “Some tenants may not have the same level of flexibility. Staggered workdays may not be acceptable. For example, if you have a trading floor, it doesn’t work to come in at 10.”

The level of exposure people will confront before they set foot in the building is beyond landlords’ control, but it is a key factor in how, when and how many workers will return to the office.

Mass transit like the subway, the most efficient way to move around packed New York City, could be now considered by many as too risky to use. Across the country, workplaces are now considering how to provide their workers a way to safely navigate the commute and building entry, the Wall Street Journal reported.

“We’ve been looking at the ability for a tenant to reserve a private elevator car,” Rubenstein Partners Vice President Jeff Fronek said.

Rubenstein is trying to lease up 25 Kent Ave., a brand-new, 500K SF office building in Williamsburg.

“We are exploring everything," Fronek added. "Do we have UV light in the mechanical rooms? Do we take people's temperatures? … There will be a big range in the approach that tenants will take.”