Are you willing to entertain the idea that New York City is caught in an “urban doom cycle”? It may seem plausible if you ignore the undeniable facts. Let’s consider the metric of “major crimes” used by the NYPD, which is skewed due to the surge in auto thefts, while the crimes that truly frighten us—murder, shootings, and rape—are actually declining compared to previous years. Surprisingly, murders are expected to be 40% lower this year compared to the last two years of Rudy Giuliani’s mayoral tenure, during which there were 673 and 649 murders respectively. As we reach the midpoint of 2023, we have recorded 193 murders, on track for a total of around 400, a decrease from 488 in 2021 and 438 in 2022. However, it is worth noting that there were only 319 murders in 2019. It is important to remember that even in 2010, when there was an increase to 536 murders from 471 in 2009, Mayor Michael Bloomberg’s stop-and-frisk policy was fully implemented. These facts can be easily verified, as the late Casey Stengel once said.
Perceptions of increased crime do have a rational basis, though, primarily due to the growing street disorder that may not result in fatalities, but threatens us in other ways: unruly cyclists, open-air drug use, rampant shoplifting, and potentially dangerous individuals. The sense of a city teetering on the edge, beyond the control or intervention of the government, creates an atmosphere where actual violent crime can appear more prevalent than it truly is. But the notion that remote work will inevitably lead to the downfall of cities, a belief held by New York’s pessimists, lacks any concrete evidence apart from questionable “computer models.”
Contrary to these doomsayers, the reality is that the sidewalks are bustling, subway ridership is increasing, and there is a higher demand for apartments than ever before. Yet, the prevailing narrative remains one of impending doom. This narrative, which portrays the city in its death throes, hampers New York’s recovery from the COVID-19 pandemic. It is worth noting that in 2010, when murders rose to 536, Mayor Michael Bloomberg’s stop-and-frisk policy was in full effect.
These dystopian claims appear to be irrefutable truths, particularly to those who are impressed by mathematical equations, such as the one presented in the article that references the “law of motion for occupied space.” However, anyone who has experienced sunburn after relying on a computer model’s prediction of rainfall may beg to differ. When it comes to real estate analysis, the authors of the aforementioned paper seem disconnected from the reality of Manhattan’s real estate market. They base their findings on Kastle Systems’ survey, which claims a mere 50% occupancy rate in physical offices. However, Kastle’s sample is widely discredited due to its inadequate representation of prestigious office buildings owned by the city’s largest landlords, such as SL Green, Vornado Realty Trust, and Related Companies. These Class-A and A-plus properties constitute the core of Manhattan’s extensive office inventory and are leased to companies—financial institutions and law firms—that require a high level of office attendance. In contrast, the Real Estate Board of New York and the Partnership for New York City report significantly higher occupancy rates in premier locations—up to 90%. Therefore, the “Apocalypse” theory falls apart from the very beginning.
While it is true that commercial landlords are under pressure and owners of older buildings may face bankruptcy, it is essential to recognize that the overall value of New York City office locations falling by 43.9% by 2029—an “Apocalypse” projection not supported by any other analysis—would not signify the end of the city. The decline can be mitigated by the involvement of actual people, including elected officials, landlords, other business leaders, and individuals who are eager to return to working in-person rather than remotely.
Just as Chesley Sullenberger refuted blame for a crash that could have been avoided with a reminder to consider the human factor, the “Apocalypse” theory crumbles when human agency is taken into account. Employees may choose to return to offices, a trend that is gaining momentum as bosses insist on in-person attendance. Landlords may find that they still require the same amount of office space, even if employees only come in for three or four days a week. Additionally, owners may discover ways to repurpose office buildings for alternative uses beyond current expectations. Another Wall Street boom could also lead to increased expansion by companies, as demonstrated by Clayton Dubilier & Rice, a private equity firm that recently doubled its square footage by moving to 550 Madison Ave.
The assumption that tax revenue will shrink due to remote work is based on the belief that building values will decrease. However, recent transactions contradict this notion. For instance, SL Green sold a 49% share of 245 Park Ave. to Japan’s Mori Trust for $2 billion, indicating that the nearly 60-year-old property’s value has not catastrophically plummeted from its previous sale price of $2.2 billion in 2017, a peak market year. Comptroller Brad Lander’s report, which revealed that office-building values had actually increased to 97% of pre-pandemic levels between 2021 and 2022, offers further evidence that the projected 40% decrease in office values would have minimal impact. Even if such a decline were to occur, it would only result in a maximum of $1.1 billion in annual property tax revenue loss by 2027—a mere 3% of all property tax collections and 1% of the overall budget, which falls within the range of ordinary tax revenue variations.
In conclusion, despite its intimidating graphs and equations, the “Apocalypse” theory operates in the same sensationalist realm as alarmist predictions made by self-proclaimed “experts” that ultimately proved to be baseless. Claims of a “population bomb,” the “Great Depression of 1990,” and World War III with Japan have all been proven false. Similarly, the notion of a real estate apocalypse in New York City holds no real validity. Let’s dismiss the notion of New York’s demise and remain hopeful for the future.
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