New York workers’ return to office ignites deal hopes in battered real estate market

The commercial project is not far from JPMorgan Chase’s new global headquarters, which has space for 14,000 employees and will be completed by the end of this year.

With some of the largest office occupants in the U.S. – such as Amazon and JPMorgan – switching to five days a week of in-person attendance, firms could encounter space shortages after they shed offices over the last five years, JLL Research said in a note.

Amazon is looking for more space in New York, according to a source familiar with the matter. The company declined to comment.

NEW BUILDING

When billionaire Ken Griffin decided to combine the offices for his hedge fund Citadel and market-maker Citadel Securities in midtown roughly three years ago, he could not find enough space. He decided to construct a new building instead, getting ahead of a wave of 5-day mandates that are filling up offices. Griffin, alongside Vornado Realty Trust and Rudin Management, is developing a 62-story skyscraper at 350 Park Avenue with space for 6,000 people. Citadel and Citadel Securities will serve as anchor tenants for the building, which is expected to be completed by 2032. Employees at Griffin’s firms will start moving to a temporary location next year so that the current building, a 30-floor structure from 1960, can be demolished.

The outlook is reflected in cap rates, a measure used by investors to gauge a property’s profitability and risk. Cap rates rose sharply after the pandemic, making it less attractive for investors to buy properties. After peaking at 6.99% in the first quarter of 2024, the gauge fell to 5.77% by the end of the year, signaling better returns for investors, data from research firm Trepp showed.

Sales volumes for commercial properties in the U.S. also rose 9% in 2024 after falling by half in 2023, according to property consultants CBRE. Occupancy has climbed after declining sharply during pandemic shutdowns and remote working, analysts said.

According to data from commercial real estate advisory firm Avison Young, office utilization in Manhattan was 79.9% in January 2025 versus 66.9% across offices in major and secondary cities in the United States compared to the pre-pandemic level.

The city’s commercial buildings have diverse tenants from a range of industries, including finance, insurance and technology, said Doug Middleton, vice chairman with CBRE’s Investment Properties group. Other cities are more reliant on one or two industries, he added.Wealthy individual investors are also starting to step back into investments in higher-quality class-A offices, spurring the bank to finance deals, said Nishi Somaiya, Goldman Sachs’ global head of private banking, lending and deposits.

“Our CRE loan portfolio in the private bank is growing, which tells you that there’s a lot of demand and confidence in opportunities within the sector,” she said.

In Europe, soaring demand for high-quality offices is pushing rents to records in central London, giving investors cause for optimism even as overall office sale volumes remain at multi-year lows. “People got very excited post-COVID that this was the end of the office – it was never the end of the office,” said Hugh White, a London-based senior director at BNP Paribas Real Estate.

(Reporting by Saeed Azhar and Carolina Mandl in New York and Matt Tracy in Washington; additional reporting by Iain Withers in London and Davide Barbuscia in New York; editing by Lananh Nguyen and Nick Zieminski)