The View from New York

Just in case you imagined that the coronavirus alone was killing New York City, look at this story, about how local politicians, the dumbest on the planet, got together to undermine an economic development project in a poor Brooklyn neighborhood. 

Apparently, the lure of 20,000 new jobs and tons of tax revenue was not enough to overcome the fear of… gentrification. 

Howard Husock offers the details in a Wall Street Journal opinion piece:

In an echo of last year’s Amazon debacle, a proposed economic development project slated to bring 20,000 new jobs and $100 million in tax revenue to New York City is dead. Again the city’s progressive politicians are to blame.

Last month the owners of the 35-acre Industry City site, a 16-building warehouse complex in Brooklyn’s Sunset Park neighborhood, withdrew their rezoning request rather than let the City Council deny it. Crime and unemployment are soaring, residents are fleeing amid the pandemic, the city’s budget deficit has topped $9 billion, and as many as a third of its small businesses have closed permanently. But New York’s elected representatives think the Big Apple’s real problem is gentrification.

The developers would have built desperately needed manufacturing, commercial and retail space in an economically distressed area tucked between the waterfront and Brooklyn-Queens Expressway. But it also included hotels, restaurants and nice apartments, so politicians decided to kill it. Even some members of the Democrat-dominated council don’t understand why the project had to die. “The potential for mass job creation at Industry City, a rare oasis of manufacturing, is one of the few glimmers of hope in a moment of despair,” wrote Councilmen Richie Torres and Donavan Richards in an August op-ed.

Apparently, the politicians were severely upset to see that the good jobs that would be coming into the neighborhood would not be offered to members of the community. Unfortunately, the products of New York City’s public education system would not qualify for high paying jobs.

Husock concluded:

Because of their elected representatives’ malfeasance, New Yorkers will now miss out on something akin to an economic free lunch. Unlike Amazon, the owners of the site weren’t seeking tax breaks, only a rezoning. So in a time of economic duress, the city passed on an opportunity to make an essentially costless bet on a major job-creating project in an underserved part of town.

As for the New York City real estate market, things are not looking very good. CNBC reports:

Apartment sales in Manhattan plunged by 46% in the third quarter, as homebuyers continued to flow to the suburbs and Florida, according to new reports.

There are now about 10,000 apartments for sale in Manhattan, which would be a record, according to Compass. With so many new listings pouring onto the market and so few buyers, the inventory of unsold apartments continues to rise in a city that already had a glut of high end apartments before the pandemic. The current supply of luxury apartments for sale would take nearly three years to sell, according to a report from Miller Samuel and Douglas Elliman.

Why is this so? You know the reasons:

Manhattan is looking at high unemployment, rising crime, growing sanitation and public transit problems, and only 10% of office workers in Manhattan are returning to their buildings. All this makes buyers reluctant to make a big bet on Manhattan real estate.

We are not surprised.

And then there is the political angle-- high taxes:

The likelihood of rising taxes to pay for the city's and state's multibillion-dollar budget holes is also driving more and more of the city's real estate dollars to the suburbs and other states. Signed contracts in the Hamptons were up 76% in September compared with last year. They increased 56% in Westchester County, New York, and 36% in Fairfield County, Connecticut.

Florida has seen a nonstop surge in buying, with signed contracts for homes in Palm Beach County up 62% and up 21% in Miami Dade County.

Apparently, prices in Manhattan have still not dropped enough to attract many bids. To be fair and balanced a penthouse in Chelsea just sold for a 60% discount-- so there is cause for hope. Unless you understand that real estate taxes are geared to market value and that declining real estate prices will impact local tax revenues.

But, fear not, Gov. Cuomo and Mayor de Blasio have already decided that it's Trump's fault.

Like other blue major American cities, New York City has had a significant increase in violent crime. The Daily Mail has the story:

Murders in New York City rose 79 percent last month compared to last year, and shooting incidents soared 127 percent, according to new NYPD crime statistics.

The citywide crime stats released on Friday show that New York's summer crime wave continued into September, as the city continues to grapple with a disturbing rise in violence.

Tensions in the city remain high after months of coronavirus lockdowns, economic misery and unrest in the streets, causing petty disputes to frequently escalate quickly into violence. As well, police say that gang violence has been a major factor in the rise in shootings.

There were 152 shooting incidents across the city in September, compared to just 67 such incidents in the same month last year, a 127 percent rise, the data shows. Over the first nine months of 2020, shootings were up 91 percent.

Also last month, there were 51 murders in New York, compared to 29 in September of last year, an increase of 79 percent.

Through September 30, there were 344 murders in the city, compared to 246 murders in the first nine months of 2019, an increase of 40 percent.

Burglaries also rose an alarming 38 percent in September, and were up 42 percent for the year through September 30.

And then there is the current condition of the city’s great tourist mecca, Times Square. The Wall Street Journal reports on the scene:

A young man walked into a jewelry store near Times Square in July and asked to see the shop’s most expensive earrings. Then he grabbed them and ran off.

In years past, crowds of tourists or nearby police officers might have slowed his escape, said Jack Tobias, who runs the jewelry store with his father and his brother. But this year, the neighborhood’s streets are empty and the thief got away.

The family has owned a jewelry store near Times Square since 1963, Mr. Tobias said. His business survived the district turning seedy in the 1970s, the drop in tourism after the Sept. 11 terrorist attacks and the economic downturn during the 2007-09 recession. Of them all, he says, Covid-19 is the biggest blow to the neighborhood, the embodiment of the city that never sleeps. Times Square has never been so listless for so long.

How bad is it for the jewelry store?

Before the pandemic, the jewelry store had around 100 customers daily. Now a half-dozen qualifies as busy. The family let go four of their six employees and had to ask the landlord for help with the rent. Driving through the deserted Times Square streets in the summer and seeing plywood where shop windows used to be “felt like another nail in the city’s coffin,” Mr. Tobias said.

The problem is that the theatres are closed:

Broadway theaters, the area’s biggest entertainment draw, are closed until next year. In 2019, Broadway shows were a $1.8 billion industry that sold more than 14 million tickets, according to statistics from the Broadway League, a trade group.

And this obviously produces fewer jobs:

Of the 66,000 people working in its theaters, shops, restaurants and other non-office businesses, about half are unemployed or furloughed, according to the Times Square Alliance, a nonprofit group that promotes the neighborhood and its businesses.

Recent weekends have experienced a bit more activity, but it is still a far cry from last year. August 2020 saw 87,219 average daily visitors, according to the Times Square Alliance, down from 404,181 in August 2019.

So, that’s the view from New York on a Saturday morning.