New York, Up or Down

I would like to take it as a point of pride, but New York City has just been named the second best city in the world. It reminds us of the old Avis ads, to the effect that: We’re No. 2. As of now, the No. 1 car company, Hertz, is in bankruptcy. 

Take that for what it’s worth.

Today’s ratings were produced by something called Resonance Consulting which rates cities as culture capitals. At a time when New York’s creative culture, its theatres, its cinemas, its concert halls and all the rest are shut down… not knowing when and if they will return... it’s somewhat rich for Resonance to put New York on the list, second only to London.

And yet, Resonance is the Jerry Seinfeld of consulting firms. Located but a few blocks from yours truly, the group advises companies about tourism and real estate. Considering that New York’s tourism has dried up and that the real estate market, both commercial and residential, is in free fall, you have to give them credit for imagination.

Anyway, Time Out New York reports the glad tidings:

Resonance Consultancy, the organization behind the annual list ranking cultural capitals, says it sees enough promising developments here to keep us in the (almost) top spot.

“Today New Yorkers stand at the ready, together and alone, on their stoops and balconies ready to defend their city,” the report states. “From vague federal threats of defunding. From shadowy armies to keep calls for justice and reform loom over the city along with an invisible virus. However the world emerges, evolves or pivots out of our collective force majeure, it will happen here first.”

That is quite the image-- New Yorkers standing on their stoops and balconies ready to defend their cities. The problem is, they are not in their offices. More and more of them are leaving town. And thus doing serious damage to residential real estate.

You will be happy to know that San Francisco, where people are leaving town even faster than they are in New York is also on the list. San Francisco is at No. 14, two slots behind Chicago, notable for its absurdly high crime rate.

And yet, hope gleams eternal, and Time Out New York sees only the bright side:

While we agree that New York is on the path to spring into a post-COVID world stronger and better than ever, the city’s also responding to the immediate challenges of today in plenty of new and innovative ways.

To throw a little light, or perhaps a little sanitizer on this optimistic picture, The Daily Mail offers a more sober assessment of the current state of New York City commercial real estate.

As once the global epicenter of the pandemic, New Yorkers have been among the slowest in the country to return to offices. 

The Times reports that only San Francisco, where many large tech companies have committed to long-term remote work, has seen a lower office occupancy than the Big Apple.  

Other large cities such as Dallas and Los Angles have been much quicker to return to their office buildings.  

It comes amid fears of a further spike in cases in NYC over the cold winter months, especially given recent localized shutdowns in Queens and Brooklyn. 

Apparently, New Yorkers are not rushing back to their offices. So, companies are offering new perks to their employees. That even includes-- free lunch. What better inducement can you find.

Several companies with New York City offices are offering employees perks such as free lunch and a subsidized commute as they attempt to lure staff back to abandoned workspaces.

Despite New York state rules permitting that offices can be used to 50 percent capacity since the summer, the return to in-person work has been slow, with only around 15 percent of workers heading back to company buildings so far. 

In an effort to tempt staff into leaving remote work behind, the likes of Bloomberg, Hearst, L'Oreal, JP Morgan Chase and several real estate companies have bulked up the reasons why office work is beneficial. 

One reason that the offices are empty is that the city government, with the teachers unions, have kept the schools closed. Thus, parents are obliged to stay at home with their children. It’s bad for the economy and this is a good thing during an election season. Yet, some companies are trying to overcome this obstacle:

Expanded childcare services is a common extra perk now being made available, with real estate firm SL Green even offering a specialized pod in which employees' children can carry out remote  learning. 

So, SL Green has lured most of its people back:

At SL Green, where almost the entire office has returned, cubicles are set up with plexiglass and are separated six feet apart, while masks must be worn. 

It offers in-home child care for families and helps pay for employees to park near the office, subsidizing half of the monthly garage rate, as an extra benefit. 

They have also hired tutors to offer remote schooling for employees' children from the office, which has proved a massive factor for parents' decision in returning. 

'They each have their own offices,' Francisca Lopez, a property accountant, told the Times of the teaching pods. 'It's the best incentive for me to come to work every day.'  

The company is taking precautions, however, still celebrating office birthdays but doing so via Zoom with snacks made available for workers to bring back to their desks.  

'People, I believe, do want to come into work, but they have to know that they get their basics covered,' said Marc Holliday an executive with the firm.

Two cheers for SL Green. And yet, is it reasonable to expect all companies to go to such lengths?

The company has discovered the value of having staff working in the same place. We recall all of the consultants who claimed that telecommuting is the wave of the future, and that people will no longer need to go to offices any more. Apparently, physical presence matters. An SL Green executive explained:

'When you really peel it away, work from home, this concept of everyone, of everybody isolating at home, and all the inefficiency it brings, is in my mind a very slow cancer that is very silent but growing on this economy.' 

In other large companies, executives are said to be frustrated with the lack of in-person interaction and are anxious to have busy offices again. 

So, there you have the different sides of the issue. For my part I am not optimistic about New York City’s imminent recovery. Considering who is running the city, the odds are against the Big Apple.