Eleven years ago – at the depths of the Global Financial Crisis – when I was scared to get out of bed in the morning – somewhere near the end of 2008 – there were many who thought it was lights out for New York. The thinking was that the banks and investment banks and funds were falling apart, there were no bonuses for the people who worked at them, people would give up, the financial center would shrink down and die and possibly the center of the US world would move to DC or another location.
At this time, I made a speech to my law firm about this issue. My speech had a central theme that NYC would be just fine. My reasoning was simple – it was that New York City has a special magic to it that makes the key ingredient – the talented people – stick around. Even though everything financial was crashing, my thesis was that the people that think of and effectuate complex real estate and corporate financial transactions wouldn't "want" to leave. They would "want" to stay in New York, and if they did stick around they would create the next upside.
That is "exactly" what happened. The talent stayed, and New York grew stronger than ever before.
By the way, although I didn't make a speech about it at the time, I had the same view after 9/11, when people thought that population centers were finished since they would be terrorist targets, and everyone would move away. I also thought at that time that New York would flourish again.
Now I see articles that say 'Could the Coronavirus be a 'Turning Point' For New Yorkers to Leave en Masse?' or 'NYC Brokers' Deeply Shaken' by Crisis, Confidence Hits All Time Low,' and many more similar articles.
I am not personally in New York City right now, but my friends tell me it is "scary" and worse. Ambulances – sirens – hospitals under siege – and people are dying – it is about as awful as it could possibly be. It is unfair to compare awful events, perhaps, but of course, it brings back memories of 9/11.
At the same time, heroes are arising – different heroes than last time – this time, the heroes are the people in the hospitals, the nurses, the doctors, those delivering food, and doing the basics to keep the essential services running. I take my hat off to those people and thank them.
And, I am praying that in the end, 'the worst' will be less terrible than our contemplation.
But I am not writing about that here. I am writing as The Real Estate Philosopher as to what I think is the future of New York City vis a vis the real estate industry.
And my conclusion is the same as it was after 9/11 – and after The Global Financial Crisis – and after the ten or twenty other shocks that have hit New York City in the past 100 years – which is that once this Crisis is over:
New York City Will Flourish Again – Stronger Than Ever
In my prediction, I note that I've now been right twice before – is the third time a charm?
First, consider articles we have seen and the back-story topics of conversation:
Could the Coronavirus be the 'Turning Point' For New Yorkers to Leave en Masse?
NYC Brokers' Deeply Shaken' by Crisis, confidence Hits All-Time Low
People will work at home – so offices are worthless or a lot less
Co-working is over with – since no one wants to be near anyone
Same thing with co-living
Tenants won't pay rent – borrowers won't pay lenders – lenders won't pay their margin calls – it will be a catastrophe of epic proportions. This is just the beginning
People want to leave New York anyway due to the taxes – this is the final bell
There will be more pandemics, so big cities are done
There is too much left-leaning politics against the real estate industry in New York City
Last year the value of multifamily properties was destroyed by the dramatic changes to the rent regulatory laws – and that will continue and get worse
Many businesses that are closed will not reopen
Well, I can't speak for everyone. But I will tell you this flat out:
I'm not going anywhere!
Full disclosure – I live in New Jersey – but have lived in New York City suburbs – and commuted to New York City – almost my entire life. New York is the center of my universe, and it always will be.
At some time – I hope soon – this will pass and everyone will remember why we love our amazing city. And at this bleak time I thought a reminder or two couldn't hurt, so here goes with a few:
- New York City is one of the global centers of the arts of every possible kind from Broadway to the most eclectic art forms.
- New York City is still the undisputed financial capital of the world – and I don't see any evidence that is changing even a little a bit.
- New York City has the finest dining on the planet – I routinely think of it as the food capital of the world. And this is whether you want a $100 steak or a cheap, and ridiculously delicious, $1.00 hot dog with mustard and sauerkraut slathered all over it.
- New York City has the greatest of human beings – and I'm not just saying that. We are a good, generous, loving people everywhere and the first to reach out to help others in need.
- New York City has more diversity of human beings than anywhere in the world. It is the true melting pot of humanity. You walk down the street, and you see every possible variant of humanity, and, better yet, it's great to experience it.
- New York City has such an incredible mixture of communities, including Chinatown, Little Italy, and places where just about every group nestles.
- New York City is a breeding ground for an incredible diversity of human thought, talent and creativity.
- New York City has more educational institutions than you can shake a stick at.
- New York City is tech, tech, tech and more tech. Technology of all kinds is growing like crazy here as the Google-type companies eat up the city.
- New York City can break you for sure – but it can make you too. There is no better place to start a career in almost any industry.
- New York City has an undefinable bustle and hustle and palpable energy that vibrates off the pavement and into our hearts. One of my associates mentions that "this is where the action is." Another one says, "it's hard to define, but the 'energy' of the city is inspiring, it keeps you motivated to pursue your dreams." And yet another one says New York City is "the opportunity to make what you want with your life."
- New York City has so many events and groups and gatherings, I suspect it is impossible even to catalog them. One of my associates mentions "the never-ending lecture opportunities covering everything from art, business, economics, fashion, philosophy -- you can find an expert speaking on something of interest every day or night." Another associate mentions "I don't have to go to the south to have great barbecue, I don't worry whether my favorite musicians will have a show in town because I know that they will; I can go to a social gathering and meet people from Lenox Hill to Liguria to Laos. Like many New Yorkers, I love getting out and traveling the world, but there's something special about knowing the world comes to us, too."
- New York City has some sports teams too – some of them win sometimes as well and boy do we all get excited when that happens
- New York City has an ease of getting around due largely to how compressed it is. If you are a walker, you can walk almost anywhere to anywhere.
- New York City is an old city, with a deep history. You can see it in the buildings and the architecture.
- And finally, New York City is the City that Never Sleeps – where Frank Sinatra famously sang, "If I can make it there, I can make it anywhere…."
I know this is kind of a long list – but I just couldn't stand not to mention these things as I was writing it.
This is because all of these things will come again, once we get through this awful [expletive inserted] virus. And we should think about these good things too – which will come again.
So, in the end, I don't think people as a group "want" to leave New York City, although, of course, there are always reasons to come and go from any location that are individual and personal in nature.
And, that is the reason I strongly believe that the talented and amazing people will stay right here. And, that is why, once again, I say:
New York City Will Flourish Again – Stronger Than Ever
I said this in 2001 – I said this in 2008/2009 – and I will say it again now.
So, at this time of deepest darkness and sadness I will stick my neck out – gulp – and say that there has never been a better time to be investing in, lending on, developing, buying, building, leasing, or otherwise dealing with real estate in New York City.
Bruce M. Stachenfeld, a.k.a. The Real Estate Philosopher®