New York City thinks up to half of restaurants will close permanently [pdf]
osc.state.ny.us
osc.state.ny.us
One of my favorite coffee places in Manhattan closed this summer. I was bummed. Their lease was up for renewal, and it didn't make sense for the owner to renew it as all of the office worker traffic was gone.
Two months later, there is a new coffee place at that spot. The guys (different owners) just got a great deal on the lease for the first two years, and they will just need to make employee expenses. One of the baristas, was actually the same barista from the previous coffee place.
so, many places will close, and new restaurants will eventually open, hopefully with better/cheaper leases, which in Manhattan is a major expense, and kinda crazy compared to other cities.
I think a lot of the businesses that depended on office workers are going to close. While the ones that are in more residential areas, with available outdoor seating, will fare a bit better.
I'm not sure replacing established successful businesses with new ones is a fair trade...
Then, they find out they can't rent at those prices, they still are hesitant to drop prices and just offer 3-4 months of 'free rent' instead.
Many, eventually do capitulate, but this seems to take months or even more (for some, their building contracts have to reset, as there are REITs involved, etc).
It is some kind of human psychology at play. This is similar on how so many tech companies refuse to give meaningful raises, and have employees leave. the replacement is always more costly.
This one is easy to explain. Commercial real estate (which includes apartment buildings with 5+ units) is valued strictly by the amount of income it can produce, i.e. what the monthly rents are. If you drop the rent from X to 0.67X, you've basically cut your property value by 1/3. If you give a rebate of 4 months free rent, the effect on the property value is basically 0.
Kill both Prop 13 (entirely, not just sections of it) and rent control and you might see some normalcy return to the California property and rental market.
Essentially we have insane inflation but it's been carefully architected to only really affect real estate.
The fact that half the restaurants are closing doesn't mean there isn't demand for those restaurants and employees after the pandemic.
its a TRAP, He most likely signed usual 10 year $20-40K/m for a 2000ft hole in the wall with foot traffic NY lease. Super enticing amount of free months is there to lure you in. The trap is he probably personally guaranteed (house mortgage?) the lease, not the restaurant business running the place.
Everyone knew it was a matter of time when it would hit NYC, and when it did, we were blind as there was no testing available to people unless you ended up in the ICU.
My soccer team just forfeited their mach, as team members did not feel safe to play while the virus was spreading. This was way before the lockdown in early march,
I stoped going to the gym too. People just didn't feel safe, and even if things were open, people would just not go out.
Almost, all places were at about 30% capacity. In the long run, they'd still have failed. People just wont/don't like to go out or travel.
You can still go in places like Albania, or Turkey, or Greece, who managed the virus/had low levels of it, yet their tourism is not doing well at all as many folks don't like risking it.
"The restaurant industry continues to be among the most impacted with an increasing number of closures – totalling 32,109 closures as of August 31, with 19,590 of these business closures indicated to be permanent (61%)."
https://www.yelpeconomicaverage.com/business-closures-update...
Every resident in or around New York heard ambulances 24/7. Everyone knew someone that got very sick (not that anyone could even prove that they had it since testing was extremely scarce). The virus was still very new and there were legitimate reasons to suspect the death rate was much higher than it thankfully ended being. I even remember hearing rumors from friends, family, and coworkers that the feds were going to enforce a "wuhan-style" quarantine in NYC. In terms of general fright, it reminded me a lot of 9/11.
It would've been political malfeasance for the mayor/governor to do nothing in these circumstances. In terms of infections, the city recovered relatively quickly and most of the lockdown was lifted by Summer (indoor dining obviously being one of the holdouts here that hurt restaurants a lot)
I think the worst "medium-term" effects are the loss of tourists and office workers. There's very few legal restrictions on offices reopening at this point, but very few have actually come back. The triple of lockdowns, vanishing tourists, and vanishing office workers is just too much for small businesses.
I think this is key. For people trying to blame the governor of New York, just look across the political spectrum to Texas. I am not a fan of Greg Abbott in any sense, but I will give credit where credit is due, and I think his Covid policies have been very reasonable and based in science and data. And even with those looser restrictions, restaurants in major Texas cities have still been hit incredibly hard. Downtown Austin is still pretty ghost-town like, and all the businesses that cater to those downtown office workers and tourists have been devastated despite there being relatively few official restrictions left on offices.
Trump has the right idea, that people need to be made less afraid of the virus. But his execution is backwards, people aren't idiots.
The priority should have been relaxing laws to allow existing businesses to do delivery. Allowing stores to sell goods outdoors in the parking lot. Getting a couple good masks to every citizen, even though it meant reusing them. Actually useful things, instead of telling everyone not to worry about it.
Also NYC hit a hospitalization rate of 1 in 700 at the peak. Legitimate forecasts had hospitalization rates potentially blowing out available capacity. The worst State hospitalization rate now is 1 in 4600, 6x better.
On the other hand, consider the threshold for “just a bad flu” to be twice the per capita death rate from the 17-18 flu season (CDC upper estimate of 1 in 5000, so 1 in 2500). Then half of the US states are still in the “just a bad flu” or better six months on. And even that skewing to the old. Nine states haven’t reached the 1 in 5000 level of the 17-18 flu after 6 months. So, for a lot of the US, their experience was, and continues to be, different than the East Coast and certain key cities like Detroit and St Louis. My numbers say 30% of the US population is in this category.
That's the per capita death rate for New York state.
The proportion of people who died in NYC with a positive COVID test or with cause of death listed as COVID is more like 1 in 255.
On one hand, people like me in the tech industry are doing fine, or better than fine. My job is secure and my skills are in high demand. On the other hand, I have friends who are highly skilled artists (musicians and dancers) who are going through the worst depression in a lifetime. Many trained intensively since early childhood, managed to succeed in a career where very few make it, but now are considering leaving that career, because they need to eat. It's beyond heartbreaking, and because of our general isolation right now I don't see us doing much (us as both a society and through government) to support these people right now. Yes, things will eventually improve, but in the meantime we are going to lose a generation of talent.
When has this ever been true?
That said, my (relatively young) friends are classically trained musicians and ballet dancers. They are still screwed if their audience, which skews older, can't attend. This dynamic exists in lots of places, e.g. keeping kids home from school is extremely detrimental to their development, but what do you do for elderly teachers and professors?
I don't see why we need to destroy everyone's lives for a minority of high risk people. Let everyone make their own decisions rather than use the iron fist of government to decide for us.
https://www.cdc.gov/coronavirus/2019-ncov/long-term-effects.... https://www.washingtonpost.com/sports/2020/08/08/athletes-co...
While we're at it, let's do the same with drunk driving. After all, most intoxicated drivers don't actually get into accidents and many drive large safe cars that protect them well. Why shouldn't they get to decide their own risk preference for themselves? /s
There were a thousand possible ways to navigate this crisis well - Germany's wage-subsidizing Kurzarbeit system has frequently been cited. But all of them require some measure of political will and imagination, and that seems utterly lacking in America. I can't think of a single city or state which has even really tried to do more than the bare minimum.
It's a good time as any to remember this website where each pixel represents $1000 so you can get a good grip about how money is being hoarded by the ultra-rich: https://mkorostoff.github.io/1-pixel-wealth/
Same.
60% of all new restaurants close on the first year. That is very different than half of *all restaurants, even those that have been open for decades, closing in a single year.
I think the more important distinction is that this is 60% of ALL restaurants, not 60% of the 10% of new restaurants (or 6% of restaurants).
(I made up the 10%, but I'm sure it is small.)