No, New York Is Not “Dead”
The doomsayers say NYC is dead forever. Here’s why they’re wrong.
New Yorkers, it seems, are abandoning New York. Haven’t you heard? “NYC IS DEAD FOREVER,” the doomsayers calmly and rationally scream in all caps from their LinkedIn blogs — you know, the way normal, well-adjusted people usually do.
🍽️ Their three favorite restaurants have closed — New York’s legendary food scene is over!
💻 Telecommuting is on the rise — making it here means nothing anymore!
🎭 They can’t fill their second-rate comedy club — New York’s centuries-long status as an arbiter of culture on a global scale is gone!
The doomsayers, of course, are wrong. There’s nothing to be said in response to that hysterical screed that Jerry Seinfeld hasn’t already said better himself, but while it isn’t “DEAD FOREVER”, there are some interesting real estate trends right now that can help us better understand what actually IS happening, and where things are going to go from here.
So to start: what’s happened so far?
COVID’s Effect on NYC Market
From the onset of the pandemic to May 1, about 420,000 people left NYC. Much of this was panic-induced — no one knew what was happening, but they knew they didn’t want to be around for whatever it was. But as companies started announcing long-term WFH plans (Twitter even said in May that all their employees could WFH forever) and colleges started developing remote learning models, many New Yorkers started looking more permanently at relocations.
Rental prices dropped hard. In all neighborhoods I’ve tracked (Midtown Manhattan, Downtown Manhattan, Brooklyn and the Upper West Side), prices have gone down regardless of the number of rooms. If all you looked at was rental prices, you’d think all New Yorkers were getting the heck out of dodge, and fast. But the story isn’t that rental prices have dropped — it’s how they dropped.
From February till now, rents in Downtown Manhattan have dropped 20.04%. In Midtown over the same period, it’s 19.14%, and on the Upper West Side, it’s 17.85%. This is in line with everything I’ve been led to believe by real estate media and panicking LinkedIn bloggers: office workers bailing on the city for far-flung remote work pastures, families shipping out for more space and better school systems in the suburbs, and people in general not wanting to be around NYC’s near-constant wail of ambulances.
But when you look at price changes in Brooklyn over the same period, you don’t even see half of the drop. February through August, rents in Brooklyn dropped a mere 7.65%. Certainly not something you’d expect in a normal year, but hardly worthy of sky-is-falling rhetoric.
The simple fact is that New York renters didn’t get out of New York this summer. Manhattan renters did.
What does this mean?
The exasperated “NYC IS DEEEEAD” bloggers are right about a couple things: the coronavirus has radically reshaped what it means to live in New York City. In-person cultural events just aren’t happening for the foreseeable future, inside dining is off the table, and millions of New Yorkers have realized remote work actually does work. But that doesn’t mean culture, food and business are gone from NYC — only that the ways we engage with those parts of New York have changed.
There have always been and will always be people who come to New York for exclusive galas, premium dining and high-paying white collar jobs. For those people, the reasons they came to New York are gone. Their New York is dead, and they’ve moved on to find what they’re looking for elsewhere.
But those people always would have moved on, eventually. They weren’t in New York for New York, they were in New York for what they could get from it. There’s nothing wrong with knowing what you want from a city, and knowing when that city can’t give it to you anymore, but taking that experience and applying it to the enormity of New York’s millions of lived experiences is hyperbolic at best and naive at worst.
The people that were in New York for what it could do for them have left, but the ones who moved here for how it could change them haven’t. New York isn’t just glitzy galas and fancy dining — it is the dynamic, one-of-a-kind city it is because of the artists, families, entrepreneurs and dreamers that live here.
And those people aren’t going anywhere.
What will NYC’s return to normalcy look like?
With all that said and everything that’s happened, there are still opportunities to found in New York’s real estate market if you look them.
Even with rent decreasing universally across the board, Brooklyn’s rental rates are still decreasing less than Manhattan’s. Renters on Brooklyn budgets with Manhattan dreams should take another look at Manhattan this year — you never know what you might find, especially now.
People will eventually come back to Manhattan, though, so now’s the time. Even with the expected shift to remote collaboration after the pandemic lifts, NYC is still a world-wide hub of art, food, culture, finance and business. Things will be different, but the draws of this city will never go away.
What does this mean?
This is a great time to look in Manhattan, but Manhattan real estate is still easy to get wrong. Trusted guidance is needed. While many recognize the opportunity in Manhattan now, they’re spending a lot more time researching listings than they are reaching out and initiating a closing process. Renters are curious, but cautious.
New York has historically been a seller’s market — demand has always been greater than supply in the city. But the amount of Manhattanites fleeing for the suburbs has created a once-in-a-lifetime opportunity for people who are willing to seize. Landlords are recognizing the moment, too, with many offering no-fee apartments to encourage potential renters to commit.
Smart renters, if they’re financially ready, may find now is a great time to consider an NYC move they may not have otherwise.
Luke.
