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No, New York City And Others Are Not In A Death Spiral


Are big cities obsolete? Judging from a deluge of recent articles featuring city dwellers “fleeing in droves” to calmer, greener, less dense parts of the country you’d think so. It would make sense, right?

Technology loosens the bonds between workers and the office. Big firms have been moving back-offices to suburbs for years, so the narrative about a purported “Post-COVID-19 world” says that the crisis, which loosened the bonds between worker and office even further, dealt city-living a coup de grace.

The lockdowns closed all the distractions and all the perks of city life. People were forced to take stock of exactly what they had. Suddenly, it didn’t look like much: a ridiculously expensive, cramped apartment with no suitable place for kids to play.

Then, the riots began. In newly emptied downtowns, homeless encampments were allowed to enjoy almost uninhibited growth. Of course, there was also the germ factor. Some of us have always wanted to take a shower after emerging from a New York City subway tunnel, but now the data is there in black and white. Subways are super spreaders.

Why would one want to stay in such places? Cities must be circling the drain.

But here’s the thing: It may be morally satisfying to believe that the most imperious mayors of the densest, highest-crime cities (New York, Chicago, Los Angeles, and San Francisco) are being punished —  finally — for their high-taxing, fecklessly regulating ways, but hard data supporting accelerated urban flight just isn’t there.

Sure, one can find plenty of anecdotal evidence. When Joe Rogan, for instance, complained about the high taxes of California, the littered streetscapes Los Angeles, and the lockdown that closed the comedy clubs, then announced his intent to move from Los Angeles to Austin, Texas, it made the news.

The “It’s Here: The Apocalypse!” crowd also likes to point to sudden big hollow-outs in rental stock. Manhattan, where, according to the Douglas Elliman firm, the average rent for a one-bedroom last year was $3,644, is suddenly experiencing the highest rental vacancy numbers in 14 years.

Guess what? At this point, these are just measures of traditional big city churn. Stephen Sondheim immortalized New York’s churn in 1971 with his song “Another Hundred People”: “a city of strangers” who had “just got off of the train, or the plane or the bus, maybe yesterday.”

Selling a home is a better illustration of resolve. It is much more permanent than jumping in or out of a rental contract. When the real estate company Zillow went to look at sales data for its 2020 Urban-Suburban Market Report, it found:

Some faint signals may have emerged in certain places … that people are fleeing the cities for greener suburban pastures, but by and large, the data show that suburban housing markets have not strengthened at a disproportionately rapid pace compared to urban markets … While many suburban areas have seen strong improvement in housing activity in recent months, so, too, have many urban areas.

Only one city in the Zillow survey is showing real signs of exodus: San Francisco, where ”inventory has risen 96 percent with a flood of new listings.”

Most of the myth-making has been, as usual, about New York, the city about which failure is continually predicted. Conditions in New York have become almost intolerable, thus an explosion of articles like the one titled “New York is Dead Forever: Here’s Why.” That article, a true viral phenomenon, started as a post on the author’s LinkedIn page then was picked up and run in full — splashed across two well-illustrated pages — in The New York Post (the article was soon refuted by Jerry Seinfeld via an op-ed in The New York Times).

The Dying City narrative got a boost when Gov. Andrew Cuomo made a direct televised plea to “the 1 percent who pay 50 percent of the taxes.” Five months into the crisis, after he’d so masterfully gotten the virus “under control,” as he put it, the wealthy were still inexplicably huddling in second homes in Westchester and the Hudson Valley. “You gotta come back,” he mock-pleaded in a televised press conference. “We’ll go to dinner, I’ll buy you a drink, come over, I’ll cook.”

The important thing to note here is that Cuomo was addressing people with second homes. A lot of the movement data involves people with second homes, because New York City is full of people wealthy enough to afford second homes. People are, so far, hanging on to those second homes. As Ileen Schoenfeld of real estate firm Harris Brown Steven, puts it, they’re “hedging,” “waiting it out.” True, several big financial companies have moved their back offices out of New York, but they’ve kept the front offices — more hedging.

Meanwhile, what The New York Times called a mini-city and a new tech corridor is emerging along the banks of the Hudson River. New York City may have been “the epicenter of the coronavirus,” but that doesn’t seem to have stopped Facebook. On August 3, the behemoth added another 730,000 square-foot lease (of the gigantic former U.S. Postal Service headquarters) to the 2.2 million square feet of office space it has acquired in the city in the last year.

Frankly, maybe a little reduction in population and tourism wouldn’t be that bad. Perhaps the outflow into temporary or second homes merely reflects a human reflex that recoils — and even gets sick — when population density goes over a certain level, but creeps back when the air seems clearer again, and the sidewalks are not quite so dirty.

It’s clear to anyone who chats regularly with twenty-somethings, currently rattling around in the homes of their parents — in the suburbs or other states — that they’d move back in a flash if rent rates were more feasible and if they had jobs again (which Mark Zuckerberg, Jeff Bezos, et al. seem anxious to give them in the coming years).

Steve Cuozzo, who covers restaurant and commercial real estate industries for the New York Post, sees the departures as a corrective, not as a result of the corona-related deaths for which the city still mourns. Without all the insane waits, for everything from a public bathroom to a street hot dog, the city can become “a happier place than the overcrowded, overheated mosh pit of a town it had become”

There is something very special about the unique energy in big cities. Don’t declare them dead yet. Ileen Schoenfeld has been selling real estate in New York City for 37 years. “This is not new,” she says. “It trickles back, and it comes to life.”