As New York City prepares to slowly reopen, industry insiders say that most offices and small businesses are not close to doing so.
Kathryn Wylde, president and CEO of the Partnership for New York City, which represents more than 100 of the city’s largest private companies, said she doesn’t expect most white-collar workers to be back in their offices until September.
For restaurants, “they’ll be lucky to open by January 1, many of them,” she said.
A good portion of the city’s economy — and the real estate industry in particular — relies on millions of people pouring into Manhattan and other business districts each day. But now New York will have to persuade employees who can work remotely to come back, Wylde said.
“We’re going to have to make a sales pitch for the city that we’re safe, that they’ll be healthy, that the protections are in place,” she said during The Real Deal’s webinar series TRD Talks Live on Friday. “Employers are going to have to make a pitch [too]… It’s going to be a campaign.”
The city as a whole will be a new place, according to the other participants in the webinar — Alan Fishman, chairman of Ladder Capital Finance, and Andrew Kimball, CEO of Industry City.
Fishman, whose commercial REIT has $6 billion in assets, agreed that companies will want more space with fewer people occupying offices, but said that space might not be in New York City or even the metro area.
“I’m not sure it’s going to be a suburban flight as much as I think it’s going to be a redistribution around the country,” he said. “Think about the economic cycle of that. You’ll have fewer people and more space and the financial burden of that has got to get worked [out].”
Wylde noted that many Partnership member companies are surveying their people about whether they want to continue working from home or get back to the office. So far, the results are 50-50.
“There is a real split between employees,” she said.
For those who return, offices will look and feel different.
“There’s going to be a lot of design changes, different protocol,” Wylde explained. “They’re going to need more square footage. They’re going to need different layouts. They’re going to need different partitions.”
She noted that one firm from Houston is even encouraging its employees to become whistleblowers on workplace safety. “Now whoever thought they’d hear of that?” she observed, adding, “It’s to restore confidence among their employees that they’ll be protected when they come back.”
The pandemic has been a challenge for Industry City and its tenants, said Kimball, who has been working to redevelop the industrial and retail campus in Brooklyn. But one issue to watch is whether the crisis changes the dynamic of the Sunset Park campus’ rezoning application, which was frozen when public meetings were banned.
Kimball was trying to persuade locals that the jobs brought by the rezoning would be good for the area, but some argued they would go to outsiders and trigger gentrification. When the rezoning process resumes, unemployment will have skyrocketed and the prospect of new jobs might be seen in a new light.
“New York succeeds when it grows,” Kimball said. “You can’t be progressive without progress. And we’ve got to get back to that.”
But there are signs that the gap between the real estate industry and housing advocates and legislators is widening even further during the crisis.
Kimball called on business and labor groups to come together to support development, adding that an “aggressive” affordable housing plan would be a key part.
Fishman said he expects to see a complete change in the retail landscape.
“It will have to be very different from what we have today because you’re just not getting store after store after store opening up,” said the veteran business leader, who sits on Santander Bank’s board.
Kimball has been making the argument that the future is the “innovation economy” that Industry City is cultivating, not in the traditional heavy manufacturing and shipping industries that once bustled on the Sunset Park waterfront.
While it remains to be seen whether white-collar jobs will be moved to other cities or remain at home, Wylde warned, the notion that they must all be together has lost some currency during this work-from home period.
“That’s a real challenge because most firms I’ve talked to — in media, finance, tech — are finding that they very much have not lost their productivity,” she said.
Picking up on Kimball’s point, Wylde called for pre-pandemic fights about managing the city’s prosperity to be set aside in order to deal with the crisis at hand.
“There’s no good guys, there’s no bad guys,” said Wylde. “When we had prosperous times, we could afford these kind of political battles. We can’t now.”
Write to Erin Hudson at [email protected]
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