NEW YORK CITY – Moody’s Analytics show rent drops in New York City were nowhere near as bad as expected last year, and the research firm has improved its projections for 2021.

Moody’s had bleak predictions for the country’s office market in the early days of the coronavirus pandemic, but that distress has not yet come to pass, according to a paper it released this week.

In New York City, effective rents went down by just over 2% — a far cry from the nearly 9% that was forecast.

Landlords offering concessions to help tenants lock into long-term leases weather the storm and account for this price stability. The average term of leases in office buildings in the United States is 9.7 years, according to CompStak data.

Meanwhile, the paper suggests 83% of workers will return to the office in the city, easing concerns that workers will stay remote.

In a positive weekly move, available sublease space had the biggest week over week decline since November 2020. In addition at least 94 new tenants totaling 3.8 million square feet have initiated space searches in NYC since the beginning of the year. There were only 45 between March and September 2020, according to Newmark.

Office leasing velocity has picked up over 150% in the last 6 weeks. We expect this trend to continue through 2022. We anticipate this to be one of the highest leasing velocity years on record. This will be primarily due to overwhelming pent-up demand as coronavirus concerns alleviate and tenants with upcoming expirations regain confidence about committing to long-term leases.

Another bright spot is a potential surge of in-migration into Manhattan. This is a result of the plummeting of residential rents which is attracting a young demographic that had previously been priced out of New York City.

Employers follow talent, and this influx of skilled and talented workers is expected to keep firms committed to maintaining a strong New York City footprint.