New York City’s economy is genuinely healing – a far cry from a year ago, when it became the center of the coronavirus in the US. Even now, traces of the pandemic remain, but the return of New Yorkers, lifted lockdowns, and a big financial boost have helped revive the city’s energy.
NYC’s obituary may have been written countless times in 2020 – prompted by shuttering businesses and the wealthy fleeing to upstate for more space or the palm trees down south – but the most recent data tells another story. The supposed mass exodus out of the city wasn’t so massive, according to recent data from USPS. According to Bloomberg, more Manhattanites moved to Brooklyn than anywhere else between March 2020 and February – 20,000 of them, compared with 19,000 Manhattanites who moved to Florida, 10,000 of whom plan to stay permanently.
NYC also remains home to 7,743 ultra-high-net-worth individuals, more than any other city in the world, according to a Knight Frank and Douglas Elliman report in March. Mansion Global said the number of outward migrants from the NYC metro area ticked upward from 2019 to 2020 – a loss of 6.6 per 1,000 residents grew to 10.9 – but those who left for the suburbs already began returning.
City real estate, once plummeting, is rebounding. New Yorkers are upgrading to wealthier neighborhoods and fancier apartments, while there’s evidence that overseas buyers are starting to drive sales again, along with young professionals looking to buy for the first time. The number of Manhattan sales increased by 28.7% from the last three months of 2020 to the first three months of 2021, according the Elliman report.
Brooklyn’s real-estate market is recovering the fastest, and the borough has become so popular, it now costs nearly as much to live there as it does in Manhattan, The New York Times reported.
NYC hasn’t even reached its peak return of residents, but it already feels alive. Bank of America recently predicted that June would spark a dominolike return to the city, ultimately proving the mass exodus narrative was more myth than reality.
By the end of May, lifted restrictions included: most industry capacity limits, the limit on residential outdoor gatherings, the mask mandate for vaccinated people, and the midnight outdoor- and indoor-dining-area curfew for bars and restaurants. People are booking tickets for Broadway in September, crowds are attending Knicks games and watching at local bars, and the airports are starting to boom again.
Offices, too, are reopening. Credit Suisse, Goldman Sachs and Facebook have each been asking employees to return to their NYC offices by mid-June.
The boomerang migration, uptick in real estate, and economic reopening are all helping the city’s cash flow. Card spending was up by 38% in the NYC metro area compared with the previous year, and 17% compared with two years ago for the week ending May 22, according to BofA Research.
Spending on brick-and-mortar retail in NYC by local households hovered around 70% by the end of 2020, as compared to a 74% pre-pandemic trend, indicating a minimal drop from outmigration, BofA also found, while in-person spending on restaurants has improved. As of mid-April, it was still down 30% compared with two years ago but a major improvement from the 70% drop at the end of January.
NYC’s finances are also in better shape than expected. While the state’s tax revenue collected over the past fiscal year was $513.3 million lower than the previous year, the state was fearing a $3 billion bigger drop, New York Comptroller Thomas DiNapoli told Bloomberg, and a large chunk of that came from the city.
President Joe Biden’s stimulus package included $5.6 billion for NYC, which Insider’s Juliana Kaplan reported likely saved catastrophic cuts to the city budget. City Council confirmed this at a March hearing, when Department of Finance Commissioner Sherif Soliman said the federal aid had given the city a “shot in the arm” financially. He added that his office was optimistic for a “full recovery.”
Long-term budget challenges still loom. Some experts say there’s no guarantee NYC will be able to continue funding de Blasio’s current budget, calling on him to do more. But NYC is also set to get another injection of money next year, now that Cuomo has finalized a budget that would have millionaire New Yorkers pay 13.5% to 14.8% in local and state taxes – the highest taxes in the country.
To say NYC 2021 resembles NYC 2019 would be an overstatement. Several aspects of the city still aren’t quite “normal.” Tourism may not fully recover until 2025, plenty of the wealthy did permanently move or have yet to return, and central business districts like midtown aren’t their typical bustling selves. The amount of available Manhattan office space is the highest it’s been in 30 years, and rents haven’t reached pre-pandemic norms, signaling that NYC’s population still isn’t what it was. Urban areas stand to see an estimated 10% drop in spending from an economy where more workers are remote – even more so in cities like New York.
The coronavirus variant spreading throughout India and other parts of Asia may also bring a risk of some form of lockdown later this year. UK Prime Minister Boris Johnson said that his country’s full reopening could be delayed because of the variant, despite a successful vaccination campaign similar to America’s.
While NYC may never quite return to its 2019 economy, just as America itself may not, that doesn’t mean that the city has lost its luster. Much like it did after the Great Recession and 9/11, NYC is entering the next chapter of its life – and that’s starting now, in line with the race for a new mayor come November.
Source: Business Insider