Posted on 08/30/2020 6:52:17 AM PDT by dennisw
James Altucher
NYC IS DEAD FOREVER… HERE’S WHY
I love NYC. When I first moved to NYC, it was a dream come true. Every corner was like a theater production happening right in front of me. So much personality, so many stories.
Every subculture I loved was in NYC. I could play chess all day and night. I could go to comedy clubs. I could start any type of business. I could meet people. I had family, friends, opportunities. No matter what happened to me, NYC was a net I could fall back on and bounce back up.
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.
A Facebook group formed a few weeks ago that was for people who were planning a move and wanted others to talk to and ask advice from. Within two or three days it had about 10,000 members.
Every day I see more and more posts, “I’ve been in NYC forever but I guess this time I have to say goodbye.” Every single day I see those posts. I’ve been screenshotting them for my scrapbook.
Three of the most important reasons to move to NYC:
Business opportunities Culture Food And, of course, friends. But if everything I say below is even 1/10 of what I think, then there won’t be as many opportunities to make friends.
A) BUSINESS Midtown Manhattan, the center of business in NYC, is empty. Even though people can go back to work, famous office buildings like the Time-Life skyscraper are still 90% empty. Businesses have realized that they don’t need their employees at the office.
In fact, they’ve realized they are even more productive with everyone at home. The Time-Life Building can handle 8,000 workers. Now it maybe has 500 workers back.
(Midtown reopened, but still empty)
“What do you mean?” a friend of mine said to me when I told him Midtown should be called Ghost Town. “I’m in my office right now!”
“What are you doing there?”
“Packing up,” he said and laughed, “I’m shutting it down.” He works in the entertainment business.
Another friend of mine works at a major investment bank as a managing director. Before the pandemic, he was at the office every day, sometimes working from 6 a.m.–10 p.m.
Now he lives in Phoenix, Arizona. “As of June,” he told me, “I had never even been to Phoenix.” And then he moved there. He does all his meetings on Zoom.
I was talking to a book editor who has been out of the city since early March. “We’ve been all working fine. I’m not sure why we would need to go back to the office.”
One friend of mine, Derek Halpern, was convinced he’d stay. He put up a Facebook post the other day saying he might be changing his mind. Derek wrote:
“In the last week:
I watched a homeless person lose his mind and start attacking random pedestrians. Including spitting on, throwing stuff at, and swatting. I’ve seen several single parents with a child asking for money for food. And then, when someone gave them food, tossed the food right back at them. I watched a man yell racist slurs at every single race of people while charging, then stopping before going too far.
And worse.
I’ve been living in New York City for about 10 years. It has definitely gotten worse and there’s no end in sight.
My favorite park is Madison Square Park. About a month ago a 19-year-old girl was shot and killed across the street.
I don’t think I have an answer but I do think it’s clear: it’s time to move out of NYC.
I’m not the only one who feels this way, either. In my building alone, the rent has plummeted almost 30% — more people are moving away than ever before.
So…
It’s not goodbye yet. But a lifelong New Yorker is thinking about it.”
I picked his post out but I could’ve picked from dozens of others.
People say, “NYC has been through worse,” or “NYC has always come back.”
No and no.
First, when has NYC been through worse?
Even in the 1970s, and through the ’80s, when NYC was going bankrupt, even when it was the crime capital of the U.S. or close to it, it was still the capital of the business world (meaning, it was the primary place young people would go to build wealth and find opportunity). It was culturally on top of its game — home to artists, theater, media, advertising, publishing. And it was probably the food capital of the U.S.
(NYC in the ’70s)
NYC has never been locked down for five months. Not in any pandemic, war, financial crisis, never. In the middle of the polio epidemic, when little kids (including my mother) were becoming paralyzed or dying (my mother ended up with a bad leg), NYC didn’t go through this.
This is not to say what should have been done or should not have been done. That part is over. Now we have to deal with what IS.
In early March, many people (not me), left NYC when they felt it would provide safety from the virus and they no longer needed to go to work and all the restaurants were closed. People figured, “I’ll get out for a month or two and then come back.”
They are all still gone.
And then in June, during rioting and looting, a second wave of NYCers (this time including me) left. I have kids. Nothing was wrong with the protests but I was a little nervous when I saw videos of rioters after curfew trying to break into my building.
Many people left temporarily but there were also people leaving permanently. Friends of mine moved to Nashville, Miami, Austin, Denver, Salt Lake City, Dallas, etc.
Now a third wave of people is leaving. But they might be too late. Prices are down 30–50% on both rentals and sales no matter what real estate people tell you. And rentals are soaring in the second- and third-tier cities.
I’m temporarily, although maybe permanently, in South Florida now. I also got my place sight unseen.
Robyn was looking at listings around Miami and then she saw an area we had never been to before. We found three houses we liked.
She called the real estate agent. Place No. 1: Just rented that morning 50% higher than the asking price. Place No. 2: Also rented (by other New Yorkers. The agent said they came from New York for three hours, saw the place, got it, and went back to pack). Place No. 3: Available.
“We’ll take it!” The first time we physically saw it was when we flew down and moved in.
“This is temporary, right?” I confirmed with Robyn. But… I don’t know. I’m starting to like the sun a little bit. I mean, when it’s behind the shades. And when I am in air conditioning.
But let’s move on for a second:
Summary: Businesses are remote and they aren’t returning to the office. And it’s a death spiral — the longer offices remain empty, the longer they will remain empty.
In 2005, a hedge fund manager was visiting my office and said, “In Manhattan you practically trip over opportunities in the street.”
Now the streets are empty.
B) CULTURE: I co-own a comedy club, Standup NY, on 78th and Broadway. I’m very, very proud of the club and grateful to my fellow owners Dani Zoldan and Gabe Waldman and our manager Jon Boreamayo. It’s a great club. It’s been around since 1986 and before that it was a theater.
One time, Henry Winkler stopped by to come on my podcast. He was the one who told me it had been a theater.
He said, “I grew up two doors down from here and used to perform here as a kid. Then I went out to LA to be the Fonz and now I’m back here, full circle, to be on your podcast. This place has history.” Things like that happen in NYC.
(When Henry Winkler stopped by Standup NY and I got to meet the Fonz!)
In the past year, Jim Gaffigan, Jerry Seinfeld, Tracy Morgan, and many others have been on the stage.
It’s only one step to get onstage. Jim Gaffigan fell flat on his face while he was walking up the step. The next day, on Seth Meyers’ late night show, Jim said, “I failed at the one thing you’re supposed to do — I couldn’t stand up!”
I love the club. Before the pandemic I would perform there throughout the week in addition to many other clubs around the city and, in the past few months, clubs in Chicago, Denver, San Jose, LA, Cincinnati, all over the Netherlands, and other places.
I miss it.
We had a show in May. An outdoor show. Everyone socially distanced. But we were shut down by the police. I guess we were superspreading humor during a very serious time.
The club is doing something fun: It’s doing shows outside in the park. This is a great idea.
In a time like this, businesses need to give to the community, not complain and not take.
That said, we have no idea when we will open. Nobody has any idea. And the longer we remain closed, the less chance we will ever reopen profitably.
Broadway is closed until at least the spring. The Lincoln Center is closed. All the museums are closed.
Forget about the tens of thousands of jobs lost in these cultural centers. Forget even about the millions of dollars of tourist-generated revenues lost by the closing of these centers.
There are thousands of performers, producers, artists, and the entire ecosystem of art, theater, production, curation, that surrounds these cultural centers. People who have worked all of their lives for the right to be able to perform even once on Broadway, whose lives and careers have been put on hold.
I get it. There was a pandemic.
But the question now is: What happens next? And, given the uncertainty (since there is no known answer), and given the fact that people, cities, economies loathe uncertainty, we simply don’t know the answer and that’s a bad thing for New York City.
Right now, Broadway is closed “at least until early 2021” and then there are supposed to be a series of “rolling dates” by which it will reopen.
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(The Schulman Theater on Broadway on a Friday evening)
But is that true? We simply don’t know. And what does that mean? And will it have to be only 25% capacity? Broadway shows can’t survive with that! And will performers, writers, producers, investors, lenders, stagehands, landlords, etc. wait a year?
Same for the museums, the Lincoln Center, and the thousands of other cultural reasons millions come to New York City every year.
The hot dog stands outside of the Lincoln Center? Finished.
C) FOOD My favorite restaurant is closed for good. OK, let’s go to my second favorite. Closed for good. Third favorite, closed for good.
I thought the PPP was supposed to help. No? What about emergency relief? No. Stimulus checks? Unemployment? No and no. OK, my fourth favorite, or what about that place I always ordered delivery from? No and no.
Around late May, I took walks and saw that many places were boarded up. OK, I thought, because the protesting was leading to looting and the restaurants were protecting themselves. They’ll be OK.
Looking closer, I’d see the signs. For lease. For rent. For whatever.
Before the pandemic, the average restaurant had only 16 days of cash on hand. Some had more (McDonalds), and some had less (the local mom-and-pop Greek diner).
Yelp estimates that 60% of restaurants around the United States have closed.
My guess is more than 60% will be closed in New York City but who knows.
Someone said to me, “Well, people will want to come in now and start their own restaurants! There is less competition.”
I don’t think you understand how restaurants work.
Restaurants want other restaurants nearby. That’s why there’s one street in Manhattan (46th St. between 8th and 9th) called Restaurant Row. It’s all restaurants. That’s why there’s another street called Little India and another one called Koreatown.
(Restaurant Row)
Restaurants happen in clusters and then people say, “Let’s go out to eat,” and even if they don’t know where they want to eat they go to the area where all the restaurants are.
If the restaurants are no longer clustered, fewer people go out to eat (they are on the fence about where so they elect to stay home). Restaurants breed more restaurants.
And again, what happens to all the employees who work at these restaurants? They are gone. They left New York City. Where did they go? I know a lot of people who went to Maine, Vermont, Tennessee, upstate, Indiana, etc. Back to live with their parents or live with friends or live cheaper. They are gone, and gone for good.
And what person wakes up today and says, “I can’t wait to set up a pizza place in the location where 100,000 other pizza places just closed down.”? People are going to wait awhile and see. They want to make sure the virus is gone, or there’s a vaccine, or there’s a profitable business model.
Or… even worse.
D) COMMERCIAL REAL ESTATE If building owners and landlords lose their prime tenants (the store fronts on the bottom floor, the offices on the middle floors, the well-to-do on the top floors, etc.) then they go out of business.
And what happens when they go out of business?
Nothing actually. And that’s the bad news.
People who would have rented or bought say, “Hmmm, everyone is saying NYC is heading back to the 1970s, so even though prices might be 50% lower than they were a year ago, I think I will wait a bit more. Better safe than sorry!”
And then with everyone waiting… prices go down further. So people see prices go down and they say, “Good thing I waited. But what happens if I wait even more?!” And they wait and then prices go down more.
This is called a deflationary spiral. People wait. Prices go down. Nobody really wins. Because the landlords or owners go broke. Less money gets spent on the city. Nobody moves in so there is no motion in the markets. And people already owning in the area and can afford to hang on have to wait longer for a return of restaurants, services, etc. that they were used to.
Well, will prices go down low enough everyone buys?
Answer: Maybe. Maybe not. Some people can afford to hang on but not afford to sell. So they wait. Other people will go bankrupt and there will be litigation, which creates other problems for real estate in the area. And the big borrowers and lenders may need a bailout of some sort or face mass bankruptcy. Who knows what will happen?
E) COLLEGES There are almost 600,000 college students spread out through NYC. From Columbia to NYU to Baruch, Fordham, St. John’s, etc.
Will they require remote learning? Will kids be on campus? It turns out: a little bit of both. Some colleges are waiting a semester to decide, some are half and half, some are optional.
But we know this: There is uncertainty and there is hybrid. I don’t know of any college fully coming back right away.
That’s OK, you might say, so in a semester or two it might be fine.
(Columbia University)
Not so fast. Let’s say just 100,000 of those 600,000 don’t return to school and decide not to rent an apartment in New York City. That’s a lot of apartments that will go empty.
That’s a lot of landlords who will not be able to pay their own bills. Many bought those student apartments as a way to make a living. So now it ripples back to the landlords, to the support staff, to the banks, to the professors, etc.
In other words, we don’t know. But it’s going to be a lot worse before it’s better.
F) OK, OK, BUT NYC ALWAYS COMES BACK Yes it does. I lived three blocks from Ground Zero on 9/11. Downtown, where I lived, was destroyed, but it came roaring back within two years. Such sadness and hardship and then quickly that area became the most attractive area in New York.
And in 2008/2009, there was much suffering during the Great Recession, again much hardship, but things came roaring back.
But… this time is different. You’re never supposed to say that but this time it’s true. If you believe this time is no different, that NYC is resilient, I hope you’re right.
I don’t benefit from saying any of this. I love NYC. I was born there. I’ve lived there forever. I STILL live there. I love everything about NYC. I want 2019 back.
But this time is different.
One reason: Bandwidth.
In 2008, average bandwidth speeds were 3 megabits per second. That’s not enough for a Zoom meeting with reliable video quality. Now, it’s over 20 megabits per second. That’s more than enough for high-quality video.
There’s a before and after. BEFORE: No remote work. AFTER: Everyone can work remotely.
The difference: bandwidth got faster. And that’s basically it. People have left New York City and have moved completely into virtual worlds. The Time-Life Building doesn’t need to fill up again. Wall Street can now stretch across every street instead of just being one building in Manhattan.
We are officially AB: After Bandwidth. And for the entire history of NYC (the world) until now, we were BB: Before Bandwidth.
Remote learning, remote meetings, remote offices, remote performance, remote everything.
That’s what is different.
Everyone has spent the past five months adapting to a new lifestyle. Nobody wants to fly across the country for a two-hour meeting when you can do it just as well on Zoom. I can go see “live comedy” on Zoom. I can take classes from the best teachers in the world for almost free online as opposed to paying $70,000 a year for a limited number of teachers who may or may not be good.
Everyone has choices now. You can live in the music capital of Nashville, you can live in the “next Silicon Valley” of Austin. You can live in your hometown in the middle of wherever. And you can be just as productive, make the same salary, have higher quality of life with a cheaper cost to live.
G) AND WHAT WOULD MAKE YOU COME BACK? There won’t be business opportunities for years. Businesses move on. People move on. It will be cheaper for businesses to function more remotely and bandwidth is only getting faster.
Wait for events and conferences and even meetings and maybe even office spaces to start happening in virtual realities once everyone is spread out from midtown Manhattan to all over the country.
The quality of restaurants will start to go up in all the second- and then third-tier cities as talent and skill flow to the places that can quickly make use of them.
Ditto for cultural events.
And then people will ask, “Wait a second, I was paying over 16% in state and city taxes and these other states and cities have little to no taxes? And I don’t have to deal with all the other headaches of NYC?”
Because there are headaches in NYC. Lots of them. It’s just we sweep them under the table because so much else has been good there.
NYC has a $9 billion deficit. $1 billion more than the mayor thought it was going to have. How does a city pay back its debts? The main way is aid from the state. But the state deficit just went bonkers. Then is taxes. But if 900,000 estimated jobs are lost in NYC and tens of thousands of businesses, then that means less taxes unless taxes are raised.
(Revenue sources for NYC are all going down but the deficit is going up)
Next is tolls from the tunnels and bridges. But fewer people are commuting to work. Well, how about the city-owned colleges? Fewer people are returning to college. Well how about property taxes? More people defaulting on their properties.
What reason will people have to go back to NYC?
I love my life in NYC. I have friends all over NY. People I’ve known for decades. I could go out of my apartment and cross the street and there was my comedy club and I could go up onstage and perform. I could go a few minutes by Uber and meet with anyone or go play PingPong or go to a movie or go on a podcast and people traveling through could come on my podcast.
I could go out at night to my favorite restaurants and then see my favorite performers perform. I could go to the park and play chess, see friends. I could take advantage of all this wonderful city has to offer.
Only the temporary demise.
NYC will be back at some point. And has actually limped along in times past, such as through the 70s, with millions and millions living there.
Will it be harder for it to be a unipolar US business power in the future? Sure, but there were lots of Midwestern cities that were more important in earlier times too.
This dude overestimates his and his class’s current importance, while being short on history or experience.
Then the 1980s happened. Reagan. Trump (yes Trump). Guiliani. The city has been on a rocket ride ever since - until this year. But they will bounce back.
But he’s a victim of systemic racism and the legacy of slavery!
When I read things like this I'm envisioning former city residents, i.e. libs, infesting every conservative area all over the country and flipping everything Democrat.
“NYC has;
Too pivotal a location
Too much infrastructure...”
New York will probably always be a busy port and center of commerce. As this article explains the advent of universal high-bandwidth internet means the white collar and finance professionals who used to depend on Manhattan’s central location can now work anywhere. The Pandemic has forced this change and there is no motivation to revert to the older more expensive way of doing things. Because of this that “Valuable building stock” you site isn’t so valuable anymore. It’s mostly sitting there empty.
What made pre-CoVid Manhattan so magical was the confluence of an active finance and business center with a thriving arts community funded largely by tourists from all over the world.
In the 1990s I was involved with promoting Broadway musicals to travel agents, I can tell you that it took years of hard work to make Broadway an international tourist attraction. I visited Times Square recently, it’s infested with homeless junkies. I have no idea what it’s going to take to get those tourists back.
If NY continues to be run by the terminally stupid and ideological it won’t be coming back.
I rank the internet as the most recent evolution of communications that affected business/information/culture in revolutionary ways.
Printing Press > Telegraph > Telephone > Wireless/Radio > Television > Internet.
There was a 300+ year gap between the printing press and the Telegraph and a 40 year gap between the Telegraph and the Telephone, A 20 year gap between the Phone and the Radio, a 30 year gap between Radio and Television and a 60 year gap between TV and Internet.
I’m guessing something else will come along in the next 20-30 years that will be of the same revolutionary caliber as the above mentioned.
You get it! Bandwidth tells the tale but the author only mentions it once or twice.
NYC had great culture as far as museums, concerts, opera, food. But when most of these are are shutdown due to Covid--XYZ, who wants to visit and drop tourist dollars there.
“NYC had great culture as far as museums, concerts, opera, food.”
What made that great culture and food possible was a combination of highly paid professionals who worked in Manhattan and spent massively there and tourists from all over the world.
I don’t see those highly paid professionals ever coming back in those numbers. It takes years to build up a massive tourism industry like Manhattan had. A big draw to those tourists was the perception that Manhattan was a safe place to visit. That perception no longer exists. (Thank you Bill DeBlasio!)
All those tourists are not just going to suddenly reappear when some governing authority declares the Pandemic to be “over”.
I’m guessing something else will come along in the next 20-30 years that will be of the same revolutionary caliber as the above mentioned.
+++++
From a historical perspective you are almost certainly correct.
But I’m scratching my head trying to think what that “something else” might be. I really don’t think it will be in communication or even in transport unless we manage to figure out how to have Scotty beam us up to wherever we want to go.
Remember Detroit
Excellent article. Long but I read every word.
That is devastating what is happening to NYC and a good bellweather.
Will NYC come back? Maybe or maybe not. After all this is over, there will be a great rebalancing and nobody knows what that will look like. NYC has a massive amount of ready-to-go infrastructure to return to that will be very tempting when prices hit a certain low point. I can see NYC returning, but it is not a given at all.
Since it is at least partially dependent on government, and we know the government is hostile to business and freedom, NYC could very well be in a death spiral akin to Detroit.
Who knows?
Scary. The Rats have really done a job on their cities and people this time.
The most terrifying point in this article discusses how these liberal whack-job New Yorkers are taking thier money and votes to red states to destroy them and create the same communist hell holes they are leaving. It doesn’t take a lot of millionaire/billionaire commie liberal New Yorkers to move to Idaho or Tennessee or South Carolina, and turn them blue. They don’t have a lot of votes, but they have a lot of money to buy a lot of influence. And you know darn well all of these starry-eyed, idiotic commie libs will destroy these nice states.
The really bad news is, once they flip all these states blue, the GOP is done. No more GOP president, House, or Senate.
I am terrified of these New Yorkers spreading their commie ways far and wide. The best thing for me as a conservative would be for more commie libs to pack into New York state and waste their votes on an already blue state.
It is flat terrifying knowing they are moving to a host of red states and will destroy those small states in short order. Stinking rotten awful.
As a recent retiree, New York City was high on my list of places to visit, despite the nose-bleed hotel prices and taxe.
The Cloisters
Central Park
The people watching
Cruising the streets at midnight
The waterfront
The museums
The parks
The ferry rides
The Empire State building
Top of the Rock
Grand Central Station
Times Square
I could go on and on. Right now I have zero interest in ever seeing New York due to crime, homelessness, stupid laws, the decay, and not wanting to support deBlasio.
By and large, I am completely losing my desire to travel to big cities as a result of what is going on. I am a city guy. I love city amenities and entertainment. I hav been focusing my attention on that for future travel.
I am am transitioning my focus to smaller rural towns, parks, scenic areas, lakes. I probably wil be focussing my tourist dollars outside of cities rather than inside them. I don’t know how many people are starting to think like me, but it wouldn’t take too many million to starve these big liberal cities of their tourism dollars.
Don’t get me wrong. I am not boycotting big liberal cities. I just have no apetite for being a victim in them, so I want to travel to safer places where I have low risk, but can still find entertainment. It is not a boycott but a natural aversion to being a victim.
They destroyed Virginia. I moved here in the early 90’s to get the eff away from the freakshow. I wanted to own a firearm, live on my own property, drive a vehicle not held together by duct tape and bondo and living paycheck to paycheck.
That was Virginia for me.
Now after almost 30 years, we’ve planned an exit because the democraps just gerrymandered the entire state to lock out the ex-burbs and rural areas from the decision making process.
Now, at work and school functions all I hear are people/parents complaining about native Virginian’s attachment to the civil war and desire to own guns and drive trucks and bemoaning the lack of authentic pizza and bagel places.
No it’s not. And this guy is an idiot. NYC has a population of 8.4 million, and 10,000 people joined a FB group about leaving. That’s margin of error. NYC is way too big, too complicated, and too much of a port city, to die.
I envy you. You got to live in a relatively free and sane Virginia for 30 years. I have lived in Calfornia my entire life.
I admit that California was free and sane until about 1990, but it has been 30 years since year, each year worst than the last.
My dream was to live in Virginia. In 2002 I went to apply with Virginia DOT and they were having a hiring freeze, or I would have moved there in 2002.
My retirement dream was to retire to Virginia. The Rats have now killed that dream with the death of the Commonwealth.
While you have my utmost sincer sympathy for having to live through the destruction and collapse of your state into communist totalitarian tyranny, I still grieve for myself that I never even got the opportunity to live a single year in free, sane Virginia.
Count yourself lucky.
I am STILL seeking a new state to live. Seriously considering Tennessee or South Carolina, but both are at risk of flipping blue now that commie states like New York and California are emptying out. Their commie liberal residents are now flocking to states like Tennessee and South Carolina.
I is likely I will end up in a state I don’t like but have to live in to avoid them. Something like South Dakota or Idaho. I hate snow. Maybe Alabama will stay red for the foreseeable future. I mean, I would hate to move to Myrtle Beach only to have South Caroline flip blue 5 years from now.
Puke.
Liberals destroy everything they touch.
If someone had said in 1945 that Detroit would be an economic basket case in fifty years they would have been thought crazy. New York will not die but there's a good chance it will experience a steady decline. It used to be the largest port on the east coast but the Port of the South in Louisiana and the port of Houston are now far bigger by annual cargo volume. Having lived in Manhattan when Abe Beame and Ed Koch were the mayor I've seen the city revive but it only really got back on its feet when Rudy took over, he made a tremendous difference. If New Yorkers keep electing DeBlasio or his like its not coming back anytime soon.
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