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How Manhattan Became a Rich Ghost Town

theatlantic.com

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Re: How Manhattan Became a Rich Ghost Town

#91

Post by wgerard »

jannotti wrote: post #6
roenxi wrote: post #3

Is there some legal issue at play here that the article isn't drawing attention to? Why is it a better idea to leave a property vacant than to have a short-term tenant?

I thought the problem was almost the opposite of what the article discussed. I thought that commercial real estate almost always used long term leases and that owners are reluctant to sign them in a fast rising market. If your building is vacant, there is the possibility of selling to a developer with plans for a big development in the short term. That would argue for being pretty happy about short-term leases, since…

> in a fast rising market

Everything I've read about New York real estate has suggested that it's slowing down considerably and pretty buyer-friendly right now.

Granted that's mostly about residential real estate, but I wouldn't be surprised if it's the same with commercial as well, and would certainly explain the reluctance to sign short-term leases.

Re: How Manhattan Became a Rich Ghost Town

#92

Post by naravara »

wgerard wrote: post #87
megaman8 wrote: post #76

It's not just Amazon. The next generation is far less materialistic than generations of the past. No one can blame them for not wanting to spend 500$ on a Gucci gucci bag or 400$ on overpriced jeans, especially when they've got all that student debt. Workplace clothes are changing as well. Less people are opting for the fancy suits. Retail needs to keep up with the changes and start offering something people actually…

> The next generation is far less materialistic than generations of the past. Ehhhh, I dunno that I'd go that far. It's just different shit. I think we all know plenty of people lined up the second a new iPhone or Pixel is announced.

Materialism probably isn't the word, but conspicuous consumption of consumer goods (say that 5 times fast) is definitely less of a thing among the urban set than it used to be in the 80s and 90s. I wouldn't categorize smartphones as conspicuous consumption per se, because even when blinged out in gold they still tend to be pretty understated in comparison the the dinner-plate sized Breitlings that finance bros used to wear.

The culture at one point used to be REALLY insistent on showing off that you drink only the finest wines, eat the fanciest steaks, and so on. Trump is basically like, a distilled down and exaggerated throwback to this sort of tendency to buy stuff more to announce "I'M RICH BITCH!" than to actually enjoy the thing itself.

Insofar as millennials are still materialistic, I'd categorize it more as conspicuous consumption of "experiences." So rather than buying fancy things to announce how rich you are, you just post instagram pics of yourself in fancy places. If not for the carbon emissions from jet fuel, it would probably be a way more environmentally friendly way of being a status-whore all things considered.

Re: How Manhattan Became a Rich Ghost Town

#93

Post by ddoran »

swarnie_ wrote: post #29
chasing wrote: post #15

Earlier quoted context omitted.

I think this is sort of happening in NYC: The center of gravity is sort of moving to Brooklyn since it's cheaper, there's more space, it's more interesting, etc. And depending where you are, Manhattan is still very accessible. Obviously the key NYC tourist targets aren't moving, but anecdotally I am seeing an uptick of tourists in my 'hood. For what it's worth.

I haven't been in Brooklyn for getting on 10 years. Can you elaborate on what popular tourist friendly areas are now about? (I'm in NYC in March '19)

Sign up for the New York Road Runners NYC Half (March 17th - St Patricks Day!) As of 2018 the new course starts in Grand Army Plaza Brooklyn, down Flatbush Avenue and run across the (closed to traffic) Manhattan Bridge, along the FDR, through Times Square and finish in Central Park (lottery and charity only though).

Spend a half day around Brooklyn Bridge Park, Dumbo and the Brooklyn Heights Promenade - especially the latter given the area is about to go through a major upheaval as the BQE cantilevered section is due to go through some major renovations lasting 6+ years.

A half day in Brooklyn Museum, Brooklyn, Botanical Gardens, Prospect Park.

Checkout the breweries and coffee shops of Gowanus and Carroll Gardens.

Do the Made in Red Hook tour and check out some really interesting local makers. [1]

Visit one of the oldest buildings in the city [2]

Take a Brooklyn Pizza / Chocolate / Neighborhood tour [3]

[1] http://www.madeinbrooklyntours.com [2] https://wyckoffmuseum.org [3] https://www.asliceofbrooklyn.com/

Re: How Manhattan Became a Rich Ghost Town

#94

Post by wgerard »

naravara wrote: post #92
wgerard wrote: post #87

Earlier quoted context omitted.

> The next generation is far less materialistic than generations of the past. Ehhhh, I dunno that I'd go that far. It's just different shit. I think we all know plenty of people lined up the second a new iPhone or Pixel is announced.

Materialism probably isn't the word, but conspicuous consumption of consumer goods (say that 5 times fast) is definitely less of a thing among the urban set than it used to be in the 80s and 90s. I wouldn't categorize smartphones as conspicuous consumption per se, because even when blinged out in gold they still tend to be pretty understated in comparison the the dinner-plate sized Breitlings that finance bros used t…

> I wouldn't categorize smartphones as conspicuous consumption per se, because even when blinged out in gold they still tend to be pretty understated in comparison the the dinner-plate sized Breitlings that finance bros used to wear.

Trust me, "finance bros" still have plenty of insanely expensive items that are largely meant as signals to the people they work with (other people in finance).

Further, just because it's more understated doesn't mean it's not primarily meant as a status symbol or signal to other people. Remember when the rose gold iPhone was more expensive than the other colors, and it sold out immediately?

> So rather than buying fancy things to announce how rich you are, you just post instagram pics of yourself in fancy places.

Is that really better? Maybe it's not materialism in the strictest sense of the word, but the underlying desire (to signal status to others) is the same. The only thing that's changed is the artifact of that desire.

Re: How Manhattan Became a Rich Ghost Town

#95

Post by subpixel »

ardit33 wrote: post #18

I live in manhattan and I feel this story is a bit exaggerated, or at least I don't see the author's reality. (Him quoting a Real Estate firm, which is interested in activity, doesn't give credence to the data). The turnaround of restaurants and bars here is amazingly fast. When one fails, another one springs up. The same street will have very different storefronts each year. I once asked a restaurant owner, on how i…

You're missing a critical element of this scenario: key money. When business A fails, the owner does not sublet to business B - they sell their lease, and they charge a hefty fee. So business B has to pay for the privilege of paying already exorbitant rent.

Also, with respect if you moved to NYC in 2013 you've never actually experienced what came before hyper-gentrification.

Re: How Manhattan Became a Rich Ghost Town

#96

Post by polygotdomain »

djrogers wrote: post #33
Itaxpica wrote: post #21

Earlier quoted context omitted.

Landlords can take tax write-offs for empty properties, so they’re incentivized to sit on empty storefronts until the perfect long-term lease comes along rather than rent to a less ideal shorter-term tenant.

A tax write off is going to be worth, at best, ~35% of the value gained from actually leasing the property. That makes it considerably worse to hold on to.

Its far more complicated than that. Most of the owners of these properties are institutional, not individuals or small groups. They are far more concerned about the valuation of the real estate than it's cash flow. The cashflow side has issues too, but from a valuation perspective, once you sign a rent at a lower rate, then that will trigger a shift from the inflated, unrealized rent in the valuation model, to the actual rent in the lease. It's entirely likely that the dip in value from the signed lease is more impactful than the actual cashflow from that lease. It doesn't matter that you couldn't get the rent in the model today, since pushing out the assumption results in less of a hit in value than signing an actual lease would. This all gets billed as "the market will bounce back".

Remember there are a lot of upfront costs for the land lord as well. They put in a lot of money upfront for buildouts/base building work, and it may be 2-3 years before they actually break even on the money they put into the space. If you're not sure that the business model is going to last that long then it absolutely makes sense to sit on the vacancy.

Source: worked at a nationally invested REIT that had a good number of properties that have this same issue.

Re: How Manhattan Became a Rich Ghost Town

#97

Post by lozaning »

jotjotzzz wrote: post #90

I've lived and grew up in NYC for almost 30 years and I agree with the author. Manhattan has become an unaffordable ghost town. Walk down West Village, Union Sq, Flatiron, etc.., you see rows of closed stores that have gone vacant for a very long time now. In contrast, I was in London recently and that city was thriving compared to Manhattan, it was lively and beautiful. In addition, NYC Subway and transportation is…

I travel frequently through all sorts of parts of Asia for work and am always so jealous of the subways over there. I speak all of 4 words of mandarin, but have never gotten lost or had difficulty navigating. I wish I could say the same for Bart, which I'm embarrassed to admit still frequently gets the better of me.

Re: How Manhattan Became a Rich Ghost Town

#98

Post by dawhizkid »

ardit33 wrote: post #18

I live in manhattan and I feel this story is a bit exaggerated, or at least I don't see the author's reality. (Him quoting a Real Estate firm, which is interested in activity, doesn't give credence to the data). The turnaround of restaurants and bars here is amazingly fast. When one fails, another one springs up. The same street will have very different storefronts each year. I once asked a restaurant owner, on how i…

I don't think it's that exaggerated. The author is totally correct on West Village, for example. I don't live in NYC anymore but each time I visit it the mix of store noticeably changes (so yes, a lot of turnover) and at least 1 in 4 storefronts are closed/for lease.

Ironically the ones with staying power are those sketchy cheap jewelry stores that are of course not money laundering operations.

Re: How Manhattan Became a Rich Ghost Town

#99

Post by lumberjack »

sarabande wrote: post #2

It seems to me like in big cities, as this article describes what eventually will happen is the rich will buy up the property because nobody else can afford it, service workers won't be able to actually live within a reasonable distance in order to work there, and the city will exist mainly for 1) wealthy professionals, 2) people who use real estate to park their money, and 3) tourists. Regular working-class folk dis…

This is exactly what happens to the historic centres of some European cities. But the life of the city just moves to the outskirts for the most part.
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