Monday, January 17, 2022

Wherefore New York City?

Here we are in wonderful midtown Manhattan. New York City has a new mayor and a new district attorney. Most of us have been optimistic about the new mayor, though it is probably too soon to judge him on his ability to tamp down crime.

And yet, when a man of a certain ethnicity murdered a young woman by pushing her in front of a subway train yesterday, Mayor Adams insisted that the city is safe. It was not an encouraging sign.

The new District Attorney, one Alvin Bragg, is another story. Bragg is a pro-criminal prosecutor, someone who considers that the best way to solve the problem of minority crime is to decriminalize crime. He wants to pretend that crime does not happen, because this will make the crime statistics look better. At a time when some 75% of New York’s crimes are committed by people of a certain ethnicity, we understand his ostrich-like solution. 

As it happens, Bragg’s fellow prosecutors are none too happy with his absurd new policy. So, at least a dozen career prosecutors have decamped from his office. Not what I would call a vote of confidence, cast, I would underscore, by people who are surely not Trump voters. They are probably not even Republicans.

So, criminals have gotten the message from the new DA. We shall see whether he and the mayor can turn things around.

And then there is the jobs problem. New York City lost a significant number of jobs to the pandemic. The same has been true across the country. The only difference is that people across the country have returned to their jobs while people in New York City have not.

A quick walk around midtown tells the story. Storefronts are shut down. Restaurants have closed. Within a two block radius of my apartment, at least a half dozen stores have shut down.

The only new replacement business, on the corner of 45th and Second Avenue, is a large boutique that specializes in selling golf clubs. One thing you do not really  need in midtown is a place where you can buy golf clubs.

Anyway, apartment rentals have been strong. Apartment sales have been strong. Office occupancy is down significantly. Precisely how this disparity between apartment prices and empty offices resolves itself is yours to imagine. I do not think that it is a good thing.

True enough, there are openings for new jobs. Interestingly, from the perspective of commercial real estate, many of these new jobs allow for remote work.

The New York Post reports:

New York City firms offered nearly quadruple the number of remote jobs to new applicants in the past year, according to data obtained by The Post.

“And this is just the beginning,” said NYC Partnership CEO Kathryn Wylde, whose business group analyzed figures compiled by the numbers firm Emsi Burning Glass.

The key industries with the highest jump in virtual-work offers amid the coronavirus pandemic included administrative, information and financial services.

 

In early 2020, there were 6,700 out of 163,000 postings for city jobs that could be filled by remote workers, or 4 percent of the total.

By this past December, there were 25,800 out of 243,000 jobs postings for the same work, or 10.6 percent.

Wylde noted that the virtual jobs “allow the employee to work from anywhere in the world” — leading to a seismic impact on the city’s business district and culture and society as a whole.

Fewer in-person workers in the Manhattan Downtown and Midtown business districts mean less foot traffic for eateries and pubs in the area, potentially leading to other job losses and firm closures.

Of course, this new reality means that the city and the state will be losing tax revenue. How long will it take for senior executives, the people who pay most of the taxes, to decide that life will be sunnier in Florida.

As for office occupancy, the situation is bleak:

A poll conducted by the partnership in November found just 28 percent of Manhattan workers were back at their desks on an average workday and that a majority were still working remotely 18 months into the pandemic.

And employees are not in a hurry to return to their cubicles.

A just-released national survey by Morning Consult found that 55 percent of respondents tele-working from home said they would considering quitting their jobs if they were forced to return to their office desks before they felt it was safe.

On the bright side, one study found COVID-induced at-home set-ups saved New Yorkers thousands of dollars by eliminating commuting and other daily expenses.

“This is a big cultural shift, and I don’t see it reversing,’’ Wylde said of the work-from-home phenomenon.

“It will require repurposing retail and older office space for housing and other purposes. It also will require rethinking transit and city services, since long-standing commuter patterns will change.”

Note well, for many people the issue is safety. If people feel that they cannot travel on the subways without risking their lives, and if they believe that the new mayor does not see the problem and that the new district attorney is encouraging crime, they will stay away.

One notes, as the article points out, that the movement toward remote work is happening across the country. And yet, the city is doing far less well than other cities in bringing back jobs:

The New York Post has the story:

New York City lags behind the rest of the country in post-pandemic pandemic jobs recovery, a new city report has found.

The US has gained back “nearly all” jobs lost during the pandemic and is on course to surpass pre-pandemic employment levels this year — but the Big Apple isn’t expected to reach pre-pandemic levels “until late in 2025,” according to the Jan. 4 report from the city’s Independent Budget Office.

Only around 35% of the city jobs lost in calendar year 2020 had come back by the end of 2021, according to the Jan. 4 report by the city’s nonpartisan fiscal watchdog.

The city lost about 615,200 of its 4.7 million jobs in 2020 and saw just 212,600, or 35%, return in 2021, the report said.

Jobs in the hardest-hit, tourist-dependent leisure and hospitality industries are especially slow to return, the report said. Wholesale and retail trade also suffered outsized job losses during the pandemic, and were expected to recover slower than sectors like professional services due, in part, to “in part due to IBO’s expectation of fewer people commuting into the city on a daily basis, as well as fewer tourists and business travelers.”

One understands that people who have deep investments in real estate retain an optimistic posture. And yet, the strength of residential real estate coupled with the weakness in office occupancy is a contradiction that will eventually resolve itself-- and not necessarily for the better.

 


4 comments:

David Foster said...

Might be worth asking...what factors allowed NYC to grow and thrive in the first place?...and how many of those factors still exist? Also, are there any new ones?

Anonymous said...

Bragg is NOT a pro-criminal prosecutor. He is a pro-black-criminal prosecutor. Because blacks commit 8 times more violent crime than other races in America the left concludes that the only way to "equalize" the rate of prosecution and punishment is to not prosecute and punish black criminals. There will be a terrible price to pay for this stupid mistaken public policy.

hayek said...

A son of a friend has worked for Goldman Sachs since leaving school about 4 years ago. When his apartment lease expired he was unable to find another location near their downtown office. His solution was to go to Charleston, SC with his girlfriend and live there at half of the cost of New York. He periodically travels to NYC to make sure the boss has not forgotten him.

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