At the Wall Street Journal, Nicole Gelinas examines Bloomberg’s promise that New York won’t slide back into the “dark old days of the ’70s” despite the financial crisis. Gelinas says that if Bloomberg continues to raise taxes, then as before businesses will leave and we will again find ourselves with a “murder rate [that] doubled in just five years” (and, the article’s art director implies, graffiti-stained subways cars). She prescribes a rollback of city employees’ pensions instead, and keeping taxes low so that “other industries, attracted by lower residential and commercial real-estate prices” may thrive here and fill the civic coffers.
Gelinas does not say what other industries will come to New York, nor does she say how much lower real-estate prices will have to get to attract them. She also fails to mention that this crisis is not New York based, but national, indeed global, and doesn’t leave a lot of capital floating around.
The Sunday New York Times reports that office space at prestige address 1095 Avenue of the Americas, once going for $132 a square foot, is dragging at $95, and Bloomberg News says the commercial market is “headed for its worst year since 2004.”
But what industries that are not already here will jump at even these relative bargains? Will we tempt oil and gas companies from Houston? Will the companies that fled to Connecticut return? Our prices are still about twice those of Stamford — will our realtors really drop them low enough to compete, and will Stamford’s not adjust to prevent it?
If they do come, where will their employees live? Sunday’s New York Times says residential prices are already coming down, but as usual they mean that a $549,000 property is now going for $440,000, a bargain in go-go times but hardly meaningful for less-than-upper management workers in a recession. Already citizens who are used to living on less are resorting to drastic economies.
There are a few possible solutions. Brooklyn, for one. The already-low commercial prices in DUMBO and Downtown Brooklyn are coming down, and some Manhattan businesses are taking advantage. Maybe, as times toughen, New York-based companies will relocate to the outer boroughs, leaving the choice Manhattan addresses to accommodate foreign companies and become the Singapore of the West.
Or maybe, as is discussed in some circles, the city can bring back manufacturing. This may require taking back some of those rezoned commercial spaces that have been turned into luxury condos. It’s win-win!