Wall Street firms make slow march back to the office

New York

SL GREEN Realty Corp is opening its new US$3.3 billion office skyscraper this week, in a neighbourhood that's among Manhattan's busiest - but is now still unusually quiet.

The tower's big reveal comes at an awkward time for New York as many of the city's workers stay home for fear of contracting the coronavirus.

Demand for space in Manhattan has dropped off dramatically since the pandemic hit, with many companies reassessing their needs for physical offices. On a July conference call, SL Green projected 72 per cent leasing for One Vanderbilt by year-end, short of its initial goal of 82 per cent. SL Green's stock had slipped 51 per cent this year through the close of trading on Friday.

But the company signed a pair of new leases at the Midtown building during the pandemic and is on track to complete two more deals, SL Green chief executive officer Marc Holliday told Bloomberg. TD Bank, private equity firm Carlyle Group and SL Green itself will be among the first tenants to move into One Vanderbilt, in December or January.

Landlords have also been pressing business leaders to bring people back to their offices. SL Green has about 900 tenants across the city who "all want to be back in the buildings," Mr Holliday said. "A lot of our tenants are in already or telling us they're coming in the next month or two."

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Banks including JPMorgan Chase & Co, have said employees will start returning in the next few weeks. The biggest US bank had told its most senior sales and trading employees that they would be required to return to their offices by Sept 21, the strongest move yet by a US lender to restaff its workplaces. Workers in other functions are also being encouraged to return, up to a maximum building capacity of 50 per cent in New York.

It comes amid internal data from the bank that productivity may have slipped amid younger employees, with work output particularly affected on Mondays and Fridays.

A JPMorgan representative didn't immediately respond to a request for comment from Bloomberg on the data, which was according to findings discussed by the bank's chief executive officer Jamie Dimon in a private meeting with Keefe, Bruyette & Woods (KBW) analysts.

"The WFH (work-from-home) lifestyle seems to have impacted younger employees, and overall productivity and 'creative combustion' has taken a hit," KBW analyst Brian Kleinhanzl wrote in a Sept 13 note to clients, citing the meeting. "Overall, Jamie thinks a shift back to the office will be good for the young employees and to foster creative ideas."

American Express has also begun reopening offices in New York this month, even as it told employees that they can continue working from home through June 2021 if they wish.

The card company said it has reopened offices in 30 locations, mostly in Asia and Europe, after seeing infection rates remain consistently low. The firm began reopening facilities in New York, with about 10 per cent of workers opting to return in the initial phase.

Companies based in Manhattan have also been seeking flexible options for workers who may want to avoid public transit and stay closer to home while Covid-19 is still a threat.

WeWork is making its Brooklyn office hub available to staff who may not want to commute into Manhattan during the pandemic. The co-working company said its more than 1,500 New York-based employees can now choose to work out of Dock 72 at the Brooklyn Navy Yard, or two other Manhattan locations in addition to its headquarters in Chelsea.

Still, there are some financial firms like Synchrony Financial, which are exiting some of its leased properties, while also cutting jobs to lower costs in response to the pandemic. The largest provider of store credit cards in the US has its corporate headquarters in Stamford, Connecticut, and leases offices in nearly two dozen cities in America, including Phoenix; Charlotte, North Carolina; and Canton, Ohio.

"We've all had an opportunity to really re-look the whole work-from-home scenario, and I think probably all of us are pleasantly surprised at how well it's gone," chief executive officer Margaret Keane said at an investor conference. "We've made a decision to really accelerate that." BLOOMBERG