Wednesday, August 12, 2020

Can New York Survive Cuomo and de Blasio?

Most of the stories about New York’s future point to a decline. And yet, those who are looking for a glimmer of hope should look at the commercial real estate market. It’s one place where things are not completely dismal.

Steve Cuozzo offers some hope in The New York Post:

Let’s start with One Vanderbilt, SL Green’s all-but-completed cloudbuster next to Grand Central Terminal. Since the start of the pandemic, the $1.7 billion, 1,401-foot-tall skyscraper where office rents are among the city’s highest has raised its pre-opening tenancy from 65 percent in February to 70 percent, SL Green president Andrew Mathias told us on Monday. Financial firm Oak Hill added to its original commitment and two small private-equity firms signed new leases.

And then there are Facebook and TikTok, both of whom have recently signed leases in Manhattan.

Facebook’s lease for 780,000 square feet last week at Vornado’s Farley Building comes on top of the millions of square feet it already has in Manhattan including at Hudson Yards.

Several other notable large deals have recently been completed. Late in the second quarter, TikTok signed for 230,000 square feet at the Durst Organization’s One Five One (the deal has closed so it’s likely unaffected by a possible TikTok sale).

Since the start of the third quarter, AIG took 325,000 square feet at Rockefeller Group’s 271 Sixth Ave. and 220,000 square feet at Fosun’s 28 Liberty St. Raymond James took 160,000 square feet at Mutual of America’s 320 Park Ave. Meanwhile, we’re told that IBM is hunting more space of up to 100,000 square feet at various locations.

On the other side of the ledger, Manhattanites are leaving town at an alarming rate. The New York Post reports the data from moving companies:

The exodus that began at the start of the coronavirus outbreak, with many New Yorkers departing to their beach and country homes, has continued unabated as more leave for good, according to city moving companies overwhelmed by the avalanche of ex-pats.

“People are fleeing the city in droves,” says Moon Salahie, owner of Elite Moving & Storing in Yonkers, who has been working nonstop since the city began Phase 1 of its reopening in June.

Salahie said 90 percent of the moves are to the suburbs and mostly families with kids worried about the school year. He’s packed people out of neighborhoods all over Manhattan.

This is especially true of families with children. Why would anyone want to bring up children in such an environment?

And then, there are the chains, retail and restaurant, all of which are suffering under the draconian lockdowns ordered by Governor Cuomo and Mayor de Blasio. The New York Times reports on the fate of the Bryant Park Grill and Cafe:

The tourists are gone, the office towers surrounding it are largely empty and the restaurant’s 1,000-seat dining room is closed. Instead, dinner is cooked and served on its patio, and the scaled-down restaurant brings in about $12,000 a day — an 85 percent plunge in revenue, its chief executive said.

Five months into the pandemic, the drastic turn of events at businesses like Bryant Park Grill & Cafe that are part of national chains shows how the economic damage in New York has in many cases been far worse than elsewhere in the country.

In the heart of Manhattan, national chains including J.C. Penney, Kate Spade, Subway and Le Pain Quotidien have shuttered branches for good. Many other large brands, like Victoria’s Secret and the Gap, have kept their high-profile locations closed in Manhattan, while reopening in other states.

So, there’s something special about Manhattan… and that would be the political leadership.

The Times continues:

But New York today looks nothing like it did just a few months ago.

In Manhattan’s major retail corridors, from SoHo to Fifth Avenue to Madison Avenue, once packed sidewalks are now nearly empty. A fraction of the usual army of office workers goes into work every day, and many wealthy residents have left the city for second homes.

Many stores are still closed, some permanently, while those that are open have very little foot traffic.

For four months, the Victoria’s Secret flagship store at Herald Square in Manhattan has been closed and not paying its $937,000 monthly rent. “It will be years before retail has even a chance of returning to New York City in its pre-Covid form,” the retailer’s parent company recently told its landlord in a legal document.

Of course, we all like to be optimistic, but things are looking rather bleak in the Big Apple these days.


Ignatius Acton Chesterton OCD said...

We have to flatten the curve!

Giordano Bruno said...

I do not think a human head can calculate all of the economic damage and dislocation going on both short and long term in places like NYC. Covid and subway do not complement one another. Covid combined with a filthy and dangerous subway is even worse. Now add in a complete meltdown of capable government and the full demoralization of the police force. Think about the consequences of disbanding the plainclothes police dept and the effective prosecution of violent criminal organizations working in NYC. I am 100% bearish on NYC.

I do know this: a restaurant cannot run for long with an 85% plunge in revenue. And the employees must be searching high and low for a plan B. And tourism? fuggedaboutit.

The only possible hope for NYC is a Biden presidency, a scenario where they receive billions of dollars in subsidies from the rest of the US. God forbid. But that still doesn't fix the problems.

If Trump wins, it's going to be a power struggle of benign neglect; Trump is going to let them suffer until they make the needed changes to rejoin civilization--beginning with the police. New Yorkers will have to vote themselves new leadership to get the carrot. And he'll base patronage on support. The age-old friends and enemies policy.

I wonder how the Trump hotels are doing in this turmoil?

urbane legend said...

For four months, the Victoria’s Secret flagship store at Herald Square in Manhattan has been closed and not paying its $937,000 monthly rent.

Wow! That many people in Manhattan/NYC are willing to pay really high prices for really small pieces of flowery underwear? I don't have enough imagination. But I didn't realize 1.6 million people live there in 22 square miles.

NYC, maybe you don't elect people like Cuomo and DeBlasio next time? Maybe you give someone with a different vision, like, maybe a Donald Trump, a chance?

Sam L. said...

Blogger Ignatius Acton Chesterton OCD said...

We have to flatten the curve!

And pound it FLAT, roll over it with bulldozers, and put up a sign saying "The STUPID was STRONG in these ones. The did it to themselves."