Eric Adams Planning to Slash Municipal Office Footprint

New York City Mayor Eric Adams is quietly embarking on a quest that could add to local office landlords’ leasing burdens.

The Department of Citywide Administrative Services is directing city agencies to identify underused office space that could be dropped in an effort to cut costs, according to internal documents reported by Politico.

The project was described to agency heads in the memos as a “mayoral priority” by Jesse Hamilton, who runs the real estate division of DCAS. The process is in the early stages, DCAS spokesperson Dan Kastanis told the outlet, saying the agency is “constantly evaluating our use of space in order to maximize effectiveness and cost-savings.”

A reduction of municipal office space by the city would be a bitter pill for landlords to swallow. As of last July, the city was responsible for three of the month’s 10 largest office leases, spanning 245,000 square feet.

But that employee base isn’t growing as quickly as expected following the pandemic and positions are going unfilled, reducing the need for offices. Consolidation across eight agencies could save at least $44 million through 2028, according to budget documents, and the space evaluation is already spreading to more agencies; social services, fire and law departments are among those under scrutiny.

City Council pushed back against the plan and bemoaned that it only learned of it through the media.

The Manhattan office leasing picture looked rosier in July when leasing volume grew nearly 60 percent from the previous month, according to Colliers. Manhattan’s availability rate also fell from 17.9 to 17.6 percent, the biggest single-month drop in almost two years.

Heads of city agencies appear to be getting a crash course in real estate these days. In addition to identifying opportunities to reduce office space, the Adams administration has also tasked departments with helping to figure out what city-owned land could be converted into affordable housing.

— Holden Walter-Warner