The COVID-19 pandemic left a lasting change in the patterns of remote work and office use in New York City that will remain a challenge for its economy, according to a report released Monday by city Comptroller Brad Lander.
“An increase in social distancing and remote work has resulted in growing vacant office space since late 2020. Office rents have also trended down and remained depressed into 2022,” according to the Popular Annual Financial Report (PAFR) for fiscal 2022.
The report follows the release in October of the city’s Annual Comprehensive Financial Report (ACFR), which contains the city’s audited financial statements and detailed financial data.
“After years of steady growth, the COVID-19 pandemic was as great a shock to the city’s economy as it was to the lives of many New Yorkers,” the PAFR said. “Overnight stores, bars, and restaurants shut down, borders closed to travel, and millions of office workers began working remotely, leading to mass unemployment, falling rents, empty office buildings and deserted hotels.”
The report noted private-sector employment fell from a pre-pandemic high of 4.1 million in February 2020 to about 3.1 million in April 2020. The loss of nearly 1 million jobs in only two months was mostly in sectors of the economy that provided in-person goods and services.
As lockdowns and restrictions ended, employment began increasing steadily. Still, at the end of the fiscal 2022 private-sector employment was 182,000 below the pre-pandemic high.
Last week, a report released by state Comptroller Thomas DiNapoli showed the city’s municipal workers have been leaving their jobs at a faster rate than they can be replaced. This shortage could have widespread economic and social implications as it impacts on important city services and programs, DiNapoli said.
Many residents fled when the pandemic hit, while others lost their jobs. This caused apartment vacancies to spike and rents to fall in early 2020, the PAFR said.
The number of apartments available started falling in late 2020 and continued into this year.
Rents also fell throughout 2020 before hitting bottom in 2021. But rents surged to highs early this year and have stayed high as more workers moved from fully remote work to hybrid schedules.
New York City’s budget for fiscal 2023 totals $104 billion and remains balanced, according to the November Financial Plan update released last week by Mayor Eric Adams.
The city is one of the biggest issuers of municipal bonds in the nation. In the fourth quarter of fiscal 2022, it had about $38.8 billion of general obligation bonds outstanding. That doesn’t include various agency debt, such as the TFA or the Municipal Water Finance Authority, which have $44 billion and $32 billion outstanding, respectively.
The city’s GOs are rated Aa2 by Moody’s Investors Service, AA by S&P Global Ratings, AA-minus by Fitch Ratings and AA-plus by Kroll Bond Rating Agency. Fitch assigns a positive outlook to the city while Moody’s S&P and Kroll assign stable outlooks.
The PAFR was set up as an alternative to the more complex ACFR. It explains how the city’s government and its finances work in an easy-to-understand manner with explanatory visuals for readers.
“As New York City continues a steady recovery from the economic impacts of the pandemic and looks to challenges ahead, New Yorkers deserve a transparent accounting of our city’s economy and finances,” Lander said in a statement. “Transparency is essential to maintaining public trust, and especially when it comes to how taxpayer dollars are being spent.”