Buggy Whips in the Big City

Unless you've been spending a lot of time in New York City recently, you'd be forgiven for not knowing that there have been a lot fewer people spending a lot of time in New York City.  Specifically, a lot fewer people working in those big iconic office buildings in New York City.

A recent overview in the New York Times told us that "about 90 percent of Manhattan office workers are working remotely, a rate that has remained unchanged for months..."  That's a lot of empty buildings.  But reading on, we learn that many of those workers aren't coming back.

Spotify’s headquarters in the United States fills 16 floors of 4 World Trade Center... ts offices will probably never be full again: Spotify has told employees they can work anywhere, even in another state. A few floors down, MediaMath, an advertising tech company, is planning to abandon its space, a decision fueled by its new remote-work arrangements during the pandemic.  In Midtown Manhattan, Salesforce, whose name adorns a 630-foot building overlooking Bryant Park, expects workers to be in the office just one to three days a week. A nearby law firm, Lowenstein Sandler, is weighing whether to renew its lease on its Avenue of the Americas office, where 140 lawyers used to work five days a week.  "I could find few people, including myself, who think we are going to go back to the way it was,” said Joseph J. Palermo, the firm’s chief operating officer... JPMorgan Chase & Co., which has more than 20,000 office employees in the city, has told their work forces that the five-day office workweek is a relic."  

This kind of thing is happening all over the country (and the world), but New York City - specifically, Manhattan - is the five hundred pound gorilla.  

But no city in the United States, and perhaps the world, must reckon with this transformation more than New York, and in particular Manhattan, an island whose economy has been sustained, from the corner hot dog vendor to Broadway theaters, by more than 1.6 million commuters every day.

Midtown Manhattan and Lower Manhattan are "the nation's two largest central business districts," and right now, more office space is for lease here than any time in history - even after the 911 attacks.  Given what major employers are saying about the future of WFH, this will not improve as time goes on.

And that has substantial consequences not only for the thousands of businesses that depend on commuters who pay tolls, eat lunch, buy papers and lattes, have a drink after work, hail cabs, ,maybe stay for dinner and a show, but for municipal finances as well.  The five hundred pound gorilla pays a lot of taxes - "almost half the property tax revenues" that NYC collects.  WFH will be conspicuously absent from NYC municipal workers' options once the pandemic is under control, and Mayor DiBlasio hopes other corporations will follow suit for the good of the city.  Don't hold your breath.

So the new world could - probably will - include a radical change in the rhythms and structure of downtown New York City (and, to a lesser extent, other cities).  There is already talk of transforming empty commercial real estate into affordable housing (it's hard to write that with a straight face, but wow!  Wouldn't that be something?), but many niche service businesses may find themselves in the buggy whip museum.