Manhattan Office Values Dip Below 2020 Levels as AI Fears Outpace Actual Foot Traffic

Investors’ anxieties over AI-fuelled job losses are driving Manhattan office valuations back to pandemic-era lows, raising uneasy questions about the city’s economic future.

“AI is the new Covid.” That sentence, uttered quietly in midtown boardrooms and increasingly reflected on Wall Street screens, explains much about the slide in Manhattan’s commercial real-estate fortunes. In early June, brokerage Evercore ISI reported that investors now value marquee office titans—SL Green, Vornado Realty Trust, and Empire State Realty Trust—lower than they did at the depths of the pandemic panic in 2020. The ostensible cause may have shapeshifted from a virus to an algorithm, but the medicine prescribed by public markets appears much the same: sell and stay away.

The raw numbers are chastening. As of this week, Vornado, landlord to 20m square feet of Manhattan towers, has seen its share price drop 14% in 2024, according to Evercore. SL Green, steward of 30m square feet, is down 11% (and off by a punishing 33% from last year’s peak). Empire State Realty, whose holdings headline with the city’s most mythic skyscraper, has fallen 12% and trades at a third below its previous high. Portfolio valuations are now at or below their summer 2020 nadir: Empire State’s holdings fetch a paltry $263 per square foot, barely moved from the $266 seen when meeting rooms were ghostly. Vornado, once $364, is now $291. SL Green, down from $461, is now a mere $416.

Beneath these numbers lurk new anxieties. No longer do investors fret solely about Covid-driven remote work. Now, it is the spectre of artificial intelligence—the belief that large language models or machine-learning systems will shrink the city’s white-collar job base, and hence the need for desks and water-coolers—that steers sentiment. Steve Sakwa of Evercore notes that fears of “AI-related disruption” fuel assumptions that cash flows at New York’s best addresses might face structural impairment for years to come.

Such pessimism has precedent. In mid-2023, Vornado’s shares sank to their lowest since 1996 amid rising rates and empty conference rooms. Yet only months later, by late 2024, its price had more than tripled as fears, it turned out, were overstated. Perhaps investors have erred in gloom once again.

Certainly, some New York data suggest resilience. The city comptroller reported last month that the metropolis’s “fairly robust” office revival continued into the first weeks of 2026. Weekday subway ridership last year rebounded to 80% of pre-pandemic normal, and, among American office markets, only Miami has recaptured more of its pulse. Inclement weather appears to explain a brief January dip in office attendance, not an AI-driven mass exodus.

Still, less sanguine signals abound. Broker Colliers recorded a slip in office leasing for February, and the share of available space crept upward for the first time in two years. Market optimism wobbles. Fears of competing cities and the pull of South Florida’s climate and tax code—and now, fears that generative AI will make swathes of paralegals, accountants, and back-office analysts dispensable—cast a long shadow over Manhattan’s towers.

The implications are not academic. New York’s fiscal health is knotted tightly to commercial real estate: offices contribute about a quarter of the city’s property-tax take, underwriting essential public services. Drops in office values, if confirmed in upcoming assessments, may portend budget headaches for City Hall and a squeeze on everything from schools to transit.

For New Yorkers in the trenches—landlords, office workers, coffee-cart vendors—the pain is unevenly distributed. Top-tier addresses in midtown may stave off obsolescence, but older buildings in less desirable pockets risk consignment to an uneasy future of bargain rents or costly conversions. Local leaders talk up the potential of retrofits, but the economics seldom add up. Without a true office rebound, the city’s property market could face a long, tepid slog.

National jitters, global echoes

Manhattan, for all its galactic scale, is not alone. Office values have sagged in San Francisco, London, and Frankfurt; investors everywhere ponder how the AI revolution might remake the demand for central business districts. So far, American cities with lower living costs and better weather have lured talent and tenants, but New York’s scale and allure remain stout by comparison. Some analysts argue that sentiment is currently too miserly, underestimating both the stickiness of physical workplaces and the limits of technology to erase the need for actual human clustering.

Yet this episode offers a lesson in the cyclical, sometimes capricious nature of capital flows. Public markets aim to divine the future—and often overshoot. Many of the same landlords now trading near record lows watched their shares rebound sharply only months ago when the post-pandemic recovery appeared more robust. New York’s fundamentals—a prodigious talent pool, network effects, and a legacy of reinvention—tend to outlast short-term market panic.

Prudence, however, demands more than hope. City and state officials would do well to plan for slower growth in tax revenues, explore ways to encourage office-to-residential conversion, and ensure the city can remain globally competitive whether or not generative AI transforms the nature of work as quickly as soon predicted. History suggests New York is rarely immune to creative destruction, but nearly always finds a way to profit from it in the long run.

For now, Wall Street may view Manhattan towers as liabilities, not assets. But investors should recall that the demise of the office has been pronounced prematurely before. Structural change seems likely, but the final tally—of jobs repurposed, towers reconfigured, and value destroyed or reborn—has yet to be written. In New York, as ever, the odds favour adaptation, even if the journey is punishing.

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