Much has been written about the terrible effects of the pandemic on occupancy rates in major cities. Although New Haven is a smaller city, it has reasons to hope that office space locally will not take the big hits predicted in other areas.
First of all, we don't have the same supply. We haven't been adding to the number of office buildings the way other regions have done. In fact, we've been taking office and turning it into residential in several cases. Low supply always pushes up occupancy rates.
Secondly, we have been adding residential units, both condo and particularly rentals, at a fast clip over the past decade. Luxury buildings have all filled faster than expected, and sometimes it seems that there is an unending demand. Although some tenants commute to other cities, preferring New Haven as a place to live, most people are working or going to school here. As that continues, it leads to a greater need for commercial space, even offices. Obviously, it helps retail, restaurants, and service uses, but it has long been known that people try to work where they want to live.
Thirdly, our uses for office space don't line up exactly with most urban locations. Yale is a large tenant, in addition to owning millions of square feet of space. Biotech is a greater percentage of the for-profit sector than in most other cities, and the need for lab space and intensive collaboration means that employees can't do much of their work from home. Those factors won't change, and that will help us fill more office/flex space going forward.
Finally, COVID has pushed many to move from dense locations to ones with more open space. Smaller cities are thriving, and may outpace larger ones over the next few years. New Haven, with its desirable location between NYC and Boston, may well be one that does exceptionally well. And we're on board with that!
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