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What will be the new New York City?

Peggy Noonan argues, in this recent WSJ article, that the world has changed forever. A human habit was broken during this pandemic and city life, including office life, will never be the same in New York City. She qualifies this by saying that some people will return to offices, potentially in significant numbers. (People like being around other people.) But that things will never be what they once were. We’ve learned that we can decentralize and still get work done.

As many of you know, I am bullish on cities and I am bullish on offices. So I found myself disagreeing with many of her arguments. But Peggy does raise some valid concerns: How are cities going to pay for what just happened over the last 12 months? According to the Partnership for New York City, the city lost about 500,000 private-sector jobs since March 2020. About 300,000 residents from high-income neighborhoods also filed for a “change of the address” during this time period.

Given that the top 5% in New York represent about 62% of the state’s income tax base, the movement of people to low-tax states (and warmer places) is something to watch. It’s also a trend that existed well before this pandemic.

At the same time, I’m not necessarily convinced that (at least some of) these fleeing rich people aren’t coming back. I was speaking with a real estate agent over the weekend who is based in a popular US resort/recreation market and while he told me that, yes, he’s seeing a massive influx of people from expensive coastal markets, these people are largely choosing to rent. They want to take the lifestyle for a test drive and they are also waiting to see what happens with the world once city life returns.

There will be real financial challenges coming out of this. But as I’ve said time and time before, cities are remarkably resilient. And as Jack Shafer argued in this recent article about “memorializing the pandemic,” humans tend to have short memories, especially when it comes to bad things. The Spanish Flu has been regarded by many as a forgotten pandemic. We moved on and the same will happen this time around.

1 Comment so far

  1. I hope you are right because I live in NYC and former Financial Control Board coordinator and Lt. Governor Richard Ravitch said it is now worse than the 1970s, with the worst yet to come financially this year and next.
    The difference today is remote sharing software like Zoom. This wasn’t available even as recently as 9/11 of even the Great financial Crisis of 2008-09. Only now has the bandwidth (mostly) been available to have 50 people meet virtually.
    It has changed everything. I am meeting 5-20X the people I could meet before, with that many more meetings too.
    Whether anything useful is coming out of all these meetings is another question, the same may be said of email too.
    But where will the real productivity come from if people are afraid to meet face-to-face and in closed spaces? Going back to a socially distanced office is like having no office at all.
    People no longer feel safe even GOING to the office, with crime up, partly because of empty streets.
    We are working from home and finding it not that bad, even while missing human companionship and having a mental health crisis.
    It’s hard to predict what will happen, except it won’t be the same as before.

    Like

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