Despite High Vacancy Rates City’s Office Buildings Approach Pre-Pandemic Values

According to the New York City Department of Finance’s Tentative Property Tax Assessment Roll released in mid-January, the city’s office buildings’ assessed value is roughly $168 billion for fiscal year (FY) 2023-24. The tentative assessment represents a 7% increase from the roughly $157 billion value for FY 2022-2023, and close to 97.6% of the $172 billion value in 2019. Although the nearing recovery of pre-pandemic values seems to contradict the challenges that the city’s office buildings have been facing since the onset of COVID-19, analysts point out that current office market trends “are unlikely to be reflected in the value of the buildings themselves for quite a while.” As far as valuations are concerned, “as long as companies are still paying their rent,” it doesn’t matter if the space is sitting vacant or being subleased. However, a recovery in value “does not necessarily indicate that the sector has fully recovered,” especially when compared to “the levels expected prior to the pandemic.”