Several days ago, the New York Post published a moving piece, "New York City is dead forever." The author, former hedge fund manager James Altucher, relates a love of the city and a horror at what it is going through that is deeply resonant. Speaking of how barren the city feels right now – vacant office buildings, shuttered retail, and empty restaurants, and a massive budget shortfall – he writes:
"Now it’s completely dead. 'But NYC always always bounces back.' No. Not this time. 'But NYC is the center of the financial universe. Opportunities will flourish here again.' Not this time. 'NYC has experienced worse.' No, it hasn’t."
You won't be surprised to know that we're going to take a contrarian view. Not to invalidate Altucher's thoughtful essay, but in the sense of exploring the assumptions as if we were in a fund roundtable.
New York City has experienced worse – the aftereffects of urban renewal and disinvestment, the Savings & Loan debacle, Black Monday of 1987, and so many more – and it has adapted and survived each time. But we must go a bit further back in history to find instructive examples.
Capital, not capitol. Shortly after the American Revolution, New York City briefly served as the nation's capitol. It had also accumulated significant debts during the war. When the country's leaders proposed moving the capital to Washington, DC, New York City gladly accepted – on the condition that its debt would be forgiven. The city got rid of its debt and the politicians in one fell swoop. It returned to being the nation's capital, rather than capitol.
People felt the city was over before. They were wrong. During the misguided era of "urban renewal" (let's call that for what it was – a racist government policy intended to destroy minority communities by demolishing the older buildings or putting highways through vibrant immigrant neighborhoods), the city colluded in destroying its own vitality, and then complained about the effects of those same policies. As crime rose and affluent residents moved to the suburbs, even Columbia University – one of the city's intellectual anchors – strongly considered leaving its historic campus for the suburbs. Prices were flat for years, and even pulled back in some neighborhoods, but they rebounded.
This isn't the city's first pandemic. But it's the first pandemic in recent memory. Mother Jones published a thoughtful piece several years ago on the various pandemics that affected New York City, from annual outbreaks of yellow fever (1790s-1803) to cholera (mid-1800s), polio (1916), and influenza (1918) – and more recently, HIV/AIDS (1980s-1990s). In the 19th century, wealthy New Yorkers escaped the city to country houses or the seaside to escape – no different from those moving to the commuter suburbs or the Hamptons. Most returned when the pandemic subsided.
The city had become a bit, well, boring. For two or three generations, New York City had been one of the global destinations to make money or fulfill one's professional dreams. But in the past two decades, it has been tougher for talented young people to get a foothold in the city, and instead it had become a place for people who already had made their money. It had begun to feel like a high-rise suburb, with chain stores, expensive but bland restaurants, and a lack of eccentricity and charm that defined the city in the 80s, 90s, and early 00s.
The pandemic and the subsequent financial fallout could serve as a hard reset button for the city. Many people living here would have been just as happy living in the suburbs to which they have recently decamped. Apartment rents are dropping (and sharply, at that) for the first time in years, and there is question of whether the falling apartment purchase prices represent a bargain, or whether prices will remain flat for years.
That said, we have the utmost faith in the resilience and creativity of those who adore this city and find it difficult to imagine themselves living anywhere else. Many of those who have moved out of the city will bring their talents to improving their new hometowns – funding better restaurants, more interesting shops, or volunteering for needed causes. At the same time, this will open up opportunities for new New Yorkers to make their mark in a city that will need new ideas and enthusiasm. Remember, beloved restaurants like Tribeca's Odeon, the Meatpacking District's Florent, and Danny Meyer's late, lamented Union Square Cafe were established when those areas were dilapidated and, at times even dangerous.
The city's collective mindset is figuring out how to personally profit off of shifting market conditions, in whatever their respective fields may be. Restaurants are shut down temporarily? There should be more food trucks. In the past, we've turned industrial spaces into lofts, landfills into parks, and industrial waterfronts into recreational spaces. We have no doubt that there will be creative adaptive reuse of other spaces to serve the temporary needs of this pandemic.
Real estate prices will likely fall, and they may be largely flat for years as they had been in the 1970s and 80s. But once there is a safe coronavirus vaccine available, these less expensive spaces allow for entrepreneurs to take chances on quirky concepts – restaurants, clubs, and shops – that would not be feasible at today's asking prices. For the past few decades, the high retail rents influenced the kind of restaurants and shops that would even consider locating in the city: investor-backed projects with high expectations, flagship stores that were not intended to make a profit on per-square-foot sales, or rather efficient but soulless food chains.
It's not that the proverbial glass is half-full or half-empty, it's that we're hardwired as New Yorkers to always want another glass, period.
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