Soon after the September 11 terror attacks levelled the World Trade Center, predictions rang out that people would hesitate to work in soaring skyscrapers, and certainly not in a district that had become a mass grave.
Within three years, Mary Ann Tighe’s clients were vying for top floors in office towers and New York City’s economy was roaring back.
“There is this tendency to go to the darkest place and to write off the city,” said Ms Tighe, who, as the chair of the New York region for commercial real estate broker CBRE, played a vital role in luring tenants to a revitalised city centre after September 11.
With the city again gripped by crisis, and facing another round of dire predictions about its future, Ms Tighe has kept that experience in mind. She accepts that some things will change as a result of coronavirus. But, in the brewing debate about the future of work, Ms Tighe’s is a voice of real estate tradition, arguing that a lively office in a dynamic city — not a home — is where most people and organisations will flourish.
“I remain certain that in the fullness of time we will see people coming back to the office,” she said. “I see the natives being restless already.”
That prediction may be self-serving for a life-long New Yorker who has made a living for the past 36 years leasing office space. It may also be fanciful. At present, buildings in Manhattan are reporting about 10 per cent occupancy and visitors describe midtown as a ghost town.
Some investors and developers see epochal changes. Todd Rosenberg, co-founder of Florida-based Pebb Capital, a real estate private equity firm, is betting that many companies will shift from crowded city centres to a network of smaller satellite offices to accommodate suburban workers.
“I do think you’re going to see a migration out of major, metropolitan high-rise markets like New York and Chicago,” Mr Rosenberg said, arguing that Covid-19 had awakened companies to advances in conferencing technology and broadband internet. “If I owned a lot of office and residential in New York right now, I’d be nervous,” he said.
Some companies, including BlackRock and Morgan Stanley, have already said they expect to occupy less office space in the future. Meanwhile, rising crime and a desperate fiscal situation are darkening the mood about New York City’s post-Covid prospects.
Still, Ms Tighe, who grew up in the Bronx and has risen to become one of the most powerful figures in New York real estate, has rational arguments at her disposal.
The chief one is that working from home does not work for most people, at least not for extended periods of time. Ms Tighe, who has spent much of the past few months in her house in the Hamptons, finds it depleting. She misses the energy at CBRE’s Park Avenue headquarters.
“One of the things I treasure most about my office is I feel like I’m at the centre of New York real estate,” she says. “There are afternoons . . . where all I do is wander from office to office. And if people are in, I just chat them up.”
Companies have managed thus far, she believes, because of the social capital built up over years spent together in offices. Four months into a pandemic, that capital is being used up.
Working from home, she suspects, will make it even more challenging for many companies to achieve their goals of increased diversity. It is not easy to integrate new employees and build camaraderie via Zoom.
Remote working can also be unfair to women, Ms Tighe argues. It is often endearing when young children interrupt their father during a video call, she says. They might climb on to his lap and then wander off. When they interrupt their mother, they tend to come with demands and it plays out differently.
“The mother says, ‘Hold on!’ and the child says, ‘Where’s my unicorn backpack?’” Ms Tighe said. “Every time I read an article that says working from home is a great thing for women with kids I’m like, ‘What planet are you living on?’”
It is too soon, based on the data, to judge the debate. In the short term, office leasing activity in Manhattan dropped precipitously, falling 44 per cent in the first half of the year compared with the same period in 2019, according to CBRE. Asking rents have remained steady, although CBRE is predicting they will fall 10-16 per cent by the first quarter of 2021.
After September 11 it took a few years for the real estate market to settle. By contrast, the market moved fast during the 2008 financial crisis as companies were desperate for liquidity and promptly put their space on the sublease market.
The market bottomed out and then recovered quickly. One turning point was Ms Tighe’s success in 2011 at persuading Condé Nast, the publisher of titles including Vogue, Vanity Fair and the New Yorker, to sign a $2bn lease at the new One World Trade Center. It brought buzz to the neighbourhood and, according to Ms Tighe, reinforced the notion that companies were beginning to choose offices based on their appeal to young talent as opposed to the chief executive’s commute.
In the current crisis, she says, most of her clients are in wait-and-see mode. They are uncertain whether there will be a vaccine in the autumn or a second wave of infections. Many are uncertain what their business will look like on the other side of the pandemic.
“In the first two weeks, every single person wanted to know what did the force majeure clause in their lease say, and did it mean they have to pay rent,” she recalled. “I’d say the Talmud hasn’t been studied as closely as force majeure in New York City leases.”
Many with expiring leases have opted to renew them for the short term, she says. They are also harmonising their leases in the region, giving a company the flexibility in a few years, if they choose, to rethink their footprint. They might opt, for example, for the sort of scheme Mr Rosenberg has laid out.
Ms Tighe does not dismiss the idea that some will decamp to the suburbs and increase flexible working — but she sees incremental change, not a wholesale shift.
The key to bringing workers back to the city in greater numbers, she says, will be the reopening of schools, and building greater confidence in the safety of public transport — two things that are still very much in doubt. Then there is the need to restore the lustre of the city itself.
“The draw of the city — any city, but New York City in particular — is not just the office but all the recreational, social and cultural activities that surround the office,” she said.
Much of that has been forced into hibernation during the pandemic. Some of it will never return. Still, Ms Tighe is convinced that people will again desire connection and congregation — in a city, and in an office.
“I don’t believe, however long this lasts, that it’s going to fundamentally change human nature,” she said. “I don’t.”