The Future Of New York City as Home: Predictions and More Questions
As predictions emerge regarding the future of New York City and what the recovery will look like, some suggest that some people will leave the city altogether. The NY Times reports today (May 15) that based on cell phone data in some of the wealthiest neighborhoods over 35% of people fled the city in March and April.
Many questions arise: what percentage of those households will return, especially among those with second homes. Will people who work remotely opt to relocate to more sparsely populated areas where public health issues arising from mass transit and density are absent? Will retirees decamp for warmer climates in smaller cities where more time can be spent outdoors? And what about our recent college grads and young professionals who migrated to New York from other cities and countries? Will those unable to find or sustain employment will return to their families to save money and/or to live and where social distancing is less challenging?
Many agree that there will be some loss in the city’s population for all the above reasons. The overwhelming majority of people will stay. There is the draw of New York City – as a place of culture, diversity, opportunity and energy, the fact of long-term extended family ties, as well as those who are intimately connected to their work and communities. There is also the reality that the vast number of New Yorkers who have limited financial resources are not able to relocate even if they wished to.
New York City, as our politicians, scholars and journalists have pointed out (and as we all witness daily) is a resilient place filled with resourceful and generous people and numerous organizations. While we have not experienced anything like the COVID-19 pandemic and its economic impact, we have endured and rebounded from many difficult periods including The Great Depression, the Fiscal Crisis of the 70’s, the high crime era, crack cocaine and AIDS crisis, September 11, Hurricane Sandy, and the banking crisis of 2008-2009.
In the aftermath of September 11th, people were predicting gloom and doom and that many would flee with the city likely being an ongoing terrorist target. I even remember thinking, “will this subway ride be my last” and when crossing the Brooklyn Bridge or the Lincoln Tunnel would I make it to the other side.
New York City ended up coming back stronger than ever economically with a gain in population and several building booms. While I am cautiously optimistic about New York being able to rebound from this pandemic, there will be significant number of restaurant closings, small neighborhood businesses and retail stores that will not reopen. A question remains as to what it will take for New Yorkers to feel comfortable and safe riding the subway.
What about commercial and residential real estate? Undoubtedly there will be office-based companies that will reduce their footprint by closing some of their office where employees can productively work remotely. This could have the effect of reducing the cost of commercial space assuming depressed demand amid increased vacancy.
The impact on the residential side remains to be seen.
The Corcoran Group, which is my real estate company, reports that on-line property searches on our website have returned to pre-COVID-19 levels. While people are not buying right now, people are in fact looking at what is available. There is likely be some pent-up demand and the combined factors of historically low mortgage interest rates, the stability of home ownership and perhaps lower prices might help reinvigorate the real estate market.
On the other hand, there will likely be a tendency to “stay put” if there are significant unknowns about the possibility of the resurgence of the virus even after the city safely opens activity. There are always people that will have to move or a highly motivated to do so, behavior that may be more prevalent in the rental market. New York is still a city dominated by renters with approximately 2/3 of all households renting as opposed to owning.
It is reasonable to conclude that given the astronomic job loss and the public health challenges, it may take one to two years before New York City resembles the place we knew prior to this pandemic, taking into account the availability of a vaccine for all of our people.
One prediction I have is that people who do move will gravitate more than usual to those neighborhoods that have good to excellent access to parks, nature and open space, which exist is all five boroughs. A number of these neighborhoods are at or near sea level which included the added threat of climate change and another devastating hurricane. Perhaps the best neighborhoods for the COVID-19 era are those that have both access to open space and have decent food shopping and local restaurants.
I will highlight some of these neighborhoods in future posts.