Regular readers are familiar with our periodic custom of penning “Letters from…”when we’ve spent a meaningful amount of time in “…” and want to offer some observations, insights, and commentary on that particular city and market.
We’re not traveling.
That can mean only one thing: Time for us to compose a “Letter from New York.”
Let’s start with some data, shall we?
The first statistic, and from a more timeless perspective the only one that matters, is this:
The five boroughs contain 2.5% of US population. More than 20% of all Covid19 deaths in the country have been in New York City.
The rest, as they say, can only at some level be silence.
But you read Adam Smith, Esq., for its analysis of markets, so back to our regularly scheduled programming.
Residents filing claims for unemployment benefits ran at a weekly average of well below 10,000 in the eight weeks from March 21 through May 9, 2019. During those same weeks in 2020 claims peaked at nearly 200,000 and only once (the first week) were they below 100,000.
- Overall, private sector jobs fell by 22% in April
- 14.5% for the US overall
- In leisure and hospitality, the drop was 72%
- Vornado and Empire Realty Trust, two of the largest commercial real estate firms in the City, have reported rental receipts dropping between 10% and 50%
- Many of NYC’s marquee industries are at full stop
- Performing arts
- Broadway recently pushed back its proposed opening date to Labor Day
- The Metropolitan Opera canceled its entire 2020 season through December 30
- Restaurants and bars
- …and obviously tourism
- Performing arts
- These are the most challenging industries to reopen
New York’s other marquee industries have also been seriously hit:
- Healthcare (yes, even healthcare: hospitals have been faced with a triple whammy of massively increased costs for supplies, overtime, and the “average” patient presenting a far more complex panoply of maladies than normal, plus the obligation to provide care to all comers no-questions-asked, plus a sudden and immediate freeze on a revenue mainstay, elective surgery).
The City projects a revenue shortfall of $9-billion for 2020 (10% of its budget) and a deficit of a similar magnitude next year. New York State is not really better off, so fiscally, matters are looking parlous for quite some time.
When it comes to Law Land, without exception every managing partner or firm COO that we’ve spoken to in the last three months has said that their New York office will be the very last to reopen (tied with London, in some cases).
And then there are the truly long-term, existential, issues for the City.