We have all witnessed the immense changes catalyzed by the rise of COVID-19 and watched the world we once lived in rapidly adapt. It is as if we have had a decade of innovation in just one year. The commercial real estate industry has been especially impacted and Prop Tech has provided solutions for many of the issues posed by COVID-19. As it has become more difficult to execute tours in person, virtual tours and 3-D mapping have become increasingly popular and tech firms like Matterport have experienced increased user activity. Additionally, it has become more difficult to meet in person, which has led to a rise in virtual notary services like DocuSign, Adobe Sign and Notarize.
As firms navigate governmental restrictions and take efforts to ensure the safety of their employees, occupancy management software such as OpenPath has eased the transition back into the office. In addition, with the rise of the Delta variant of the virus, many states have reissued mask requirements, which may have an impact on the return of many employees to their offices.
COVID-19 has changed the entire world, but not all cities have been shaken upquite as much as New York City. At the Anton Group, we as a leading brokerage team have had front-row seats to the toll taken by the New York City commercial real estate industry. From office to hospitality to multifamily, we have seen all asset classes struggle in these uncertain times. As a group that operates within the greater Marcus & Millichap network, we have noted that this period has not only been hard on commercial real estate in New York City, it has impacted the industry throughout the entire country. I personally have over 25 years of experience in commercial real estate in New York City accounting for more than $18 billion worth of transactions, and I have never quite seen a period of uncertainty such as today. In addition, the projected increase in the Capital Gains Tax rate and the possibility of the increase being retroactive to April2021, has a further effect on market clarity.
Today, there are two major trends shaping the office transaction market in New York City. First, there is a significant rise in the interest by owners in creating new ground leases. Many long-term owners would like to retire, yet do not want to pay capital gains on assets they have fully depreciated. By structuring a long-term ground lease, owners can facilitate long-term cash flow for their families, and potentially negotiate a lump sum upfront payment which can be structured in a tax efficient matter. In many ways, these transactions are similar to low-cost financing for the new developer and enable long term owners to defer taxes, relinquish management duties, and provide for the future enhancement of their office buildings.
Another interesting change is the strong technology sector leasing growth.