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In a similar vein Louis Rossmann has been walking through NYC showing current commercial storefront vacancies. While each video focuses on one street the rates of empty spaces seem to be higher than in the posted article. The rents do seem to be very steep as well, which you might expect out of NYC ($40,000/month is one price which stuck with me). One root cause cited in NYC, which isn't mentioned in the above article, is that commercial loans may prohibit leasing a space at a lower rate without lender approval (as it impacts the value of the building), though I do not know if the same issue applies in Canada.

Most of the videos are long-form content which fits well into the background if anyone is interested: e.g. https://www.youtube.com/watch?v=Zjd1WNhGliY https://www.youtube.com/watch?v=Q53Wxx7aLrs https://www.youtube.com/watch?v=kuALRyGI3Ho

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My rent stabilized building in a desirable and convenient part of midtown manhattan is sitting at almost 30% vacant. This is completely unprecedented and wasn't even like this in the 80s. I'm leaving myself soon.

New York is in serious trouble and everyone is acting like things are somehow normal again.

What happened? Mass exodus of people from NY due to covid / work from home?

Serious question, I haven't seen any articles about this so just guessing

I'm from the NYC Metro.

Insane pricing pushed us out initially.

Philadelphia is such a horrible place, pre-covid I was longing to go back.

COVID restrictions and now the fallout from that don't make it feel like a good idea.

Really thinking about Florida now.

Delta loves Doris Florida are you ready for it?

Florida to me will always be the place that people’s grandparents go when they get too old to deal with NYC winters. I realize that’s foolish but there it is.

If I was going to be a tax exile I’d be more inclined to look at parts of NH within the metro area of Boston and Texas (especially Austin). Maybe Nashville.

Florida is an ecodisaster slowly unfolding. I get that a winter hovel is a nice thing, but a permanent move to Florida? Between sea rise, and temperature rise....

As stated elsewhere... Slowly boiling frogs.

If you are wealthy with fuck you money, a summer home in Miami is pretty good spend even if it sinks. Anyone else however should strongly consider their plans on how long they intend to live there.

it will be something to see when people realize miami is not the netherlands and can't just be "sea walled from the sea"

And since the rich make policy in our techno-oligarchy either overtly or covertly, that is the problem. The rich will simply move latitudes/location rather than deal with the problem to avoid billions of poor people effectively drowning (ok they won't LITERALLY drown, they'll starve from farmland loss or when their cities become uninhabitable).

It's a bleak future if you are poor and immobile.

With the rise of totalitarian/authoritarian capitalism, the upper-middle class won't be able to move freely. So many of us in America are used to free movement in the first world.

The future points to the first world being economically submissive to China in the future, and perhaps politically, and political movements within the first world show great appetite for authoritarians and distrust of the democratic norms, and it's not just Trump. How much of that is Russian and Chinese shadow propaganda remains to be seen.

Want to see first world countries turn super-not-first-world? Send a flood of refugees. The American Authoritarian Right is built fundamentally on paranoia of illegal immigration. Look at what the Syrian immigration did to Europe.

Those refugee events are peanuts compared to the displacements projected by Global Warming. Between rising sea levels, ecosystem changes/desertification, and raw temperature spikes, there will likely be billions with a big B displaced, and that will cause everyone to close their borders.

I would not count on free mobility when you need it.

Florida is also extremely suburban, even in its biggest cities the truly “city” like parts are quite small. That lifestyle is not for everyone.

Philadelphia is a wonderful city of great beauty and culture. What do you find so horrible?

I moved from Boulder to Florida maybe 2.5 - 3 years ago.

After a year in Orlando, I moved to Miami, so have been here just under 2 years I think.

We are seeing so many people from California and other tech-heavy areas migrate here lately, it's insane.

In two months I'm joining you. Finding an apartment was hard too -- buildings are at 99% occupancy and go within hours.

What makes Philadelphia “horrible” in your eyes? As somehow who has lived in what I think were nice but not luxurious parts of both urban cores, I found Philly every bit as livable and probably more pleasant and friendly, but I’m in New York now for social and work reasons

Lived in Philadelphia from college years in the mid 2000s up until about 2019.

It is a great city that is extremely walkable, has passable public transit, a tech giant (Comcast) and lots of hospitals and universities boosting the local economy. It saw a rebirth beginning with revamping its Center City district and Broad Street in the late 90s/early 00’s that has radiated outward to other areas.

The problem with Philadelphia is that it is a city that is unable to take the next step to maintain its pace of improvement. The mayor and city council are unwilling to perform city-wide street cleaning out of fear of blowback from South Philly lifers who would then have to move their 6 cars once every two weeks. They currently cannot even collect residential trash on time on a weekly basis due to an overworked and understaffed sanitation department. Their transit is underfunded, partially due to them being a blue city in a state where most of the legislature is from rural red counties that would rather build barely used highways than extending their subway or commuter rail. And last but certainly not least, the opioid crisis makes the area around Kensington and Allegheny look like something from a third world country. The city seems to have no solution other than evicting the addicts from their current encampment every year or so, which just results in them setting up shop a few blocks over.

Perhaps voters should consider another party in the city. If your leaders are not making the right decisions, why don’t you vote for different leaders? Being completely married to a single party seems to lead to these types of outcomes. No matter how bad the politicians do, no one will vote against them because they are married to the party, for better or worse.

I too am thinking of FL. Any particular city you are interested in?

My educated guess: internet shopping, combined with property owners that don’t want to face reality and tell their accountants their shops aren’t worth what they used to be (a 100% guess is that’s sometimes due to incorrect incentives. If a property manager gets a bonus based on the (perceived) value of a property, more so than on the income it generates, raising prices can be the optimal short-term strategy, even if it means shops close left and right)

I don’t think it will happen in the USA, but I think a solution would be to tolerate squatting, if the squatters improve the neighborhood.

Can only speak anecdotally, but…

A significant number of our friends and family moved since the start of COVID but they went in different directions. We’re all mid-to-late 30s working in tech, mostly, so this is in no way representative of all the people making moves.

Some people moved out of the city entirely. All of these people have good jobs with high pay but decided that this was their opportunity to get the big house in a different area. In all but one case, these were renters who bought when they moved. That last case was a family that sold their place for more than asking price in 7 days and then bought a new place.

Others were renters who bought in the city. This includes me and my wife as well as two of her siblings. We have a handful of friends who either bought or are trying to buy. We and everyone I know doing this identify as “city people” who just don’t want to leave and are using this as an opportunity to upgrade space and take advantage of the benefits of home ownership. Many of our friends who rent took the opportunity to find a bigger place at a better rate or strong armed their landlords to get better deals.

So the tldr here: in our group of friends, the people who left were those who wanted to leave anyway and didn’t have the opportunity until now. The people who stayed are those who grew up here and/or just want to stay in the city long term.

Do you feel the ones who moved out are doing so permanently? From coworkers I know who did this, it seems they are all “city people” but are finding that they really like single family zoned neighborhoods, more space, and a slower paced environment. It seems to me like what began as an experiment is likely to be a permanent change for them. Anecdotally, my sense is that these are people that never gave living outside the city a chance, or had preconceptions about it, but with this pandemic driven experience they are figuring out their actual tastes or priorities.

I’m really not sure but I think it kind of depends on the people. All our friends who bought outside the city grew up elsewhere so they seemed to be really comfortable (and in many cases excited) about it. It was as if they had a multi-year plan that would culminate in this move and the pandemic just accelerated it.

That said, a handful of them have mentioned renting apartments in the city and already come down pretty frequently. I wouldn’t be surprised if their FOMO became overwhelming once things are fully reopened and wound up coming back permanently.

I don't know about commercial, but a few years ago it seemed half or more of the new construction condos sat empty because they were investment speculation, foreign investment/hiding, and other real estate shenanigans.

The fact that quant spreadsheets extend to commercial is unsurprising.

The spreadsheets forget that you need people to make a city work.

Mass exodus from Manhattan into the other boroughs. The biggest sacrifice you make in Manhattan is space, but you make it to be near your job.

Now that a lot of places are remote, the people who could afford a Manhattan apartment don't need it anymore and got tired of living in a shoebox.

You still get all the benefits of New York in the other boroughs, just in a 1 or 2 bedroom instead of a 5th floor studio walkup.

For someone not familiar with NYC at all, what was going on in the 80s?

Lots of crime and cities not thought to be attractive places to live. Crack is often cited as the main driver of urban decay but there myriad reasons cities like nyc began a decline in the late 60’s until the early 90’s when cities began to be sought after again.

What happens is as the tax base leaves the city has less money to take care of itself leading to more people leaving, etc. The opposite happens as people move back in.

I’d never count NYC out but it was clearly in need of a correction. After the riots and the regime in charge supporting it, the increase in muggings and robbery, and the blandness to much of what Manhattan has become, I know a few people that left. Especially with remote work being more viable.

I have a friend who is an NYPD and he retired early along with his batch mate, he cited the cities policies is increasing crime and it's becoming dangerous to be out there. One of his mate got shot and died after he retired this year and he said that guy was also retiring soon and got unlucky.

The police riots were indeed awful but unfortunately I don’t think there’s going to be a correction- as they showed when they were cracking skulls in Washington sq park the NYPD can operate basically independent of the civilian authorities

The problem is NYC has learned nothing. In fact, it passed a record multibillion budget for this year after federal aid. Everyone is putting their head in the sand pretending everything is back to normal. I expect the city to crash and burn financially in another year or two. Or start begging for a federal bailout.

And I don't say this as a twisted conservative wanting to see liberal cities burn. I'm pretty fucking liberal and NYC is going pretty much off a cliff at the moment.

For a few decades NYC settled into a truce—-things would be good for real estate moguls, bankers, jet setters with 2nd/3rd/5th houses in the city, etc.

In exchange no one would complain that city government, the state authorities, and trades would be fantastically overpaid and overstaffed.

This was also good for people that worked in industries that cater to the rich (waiters, doormen, weed delivery services, etc, etc).

Things were hardly perfect but aside from the very poor and people being squeezed out of neighborhoods due to gentrification most groups were doing well enough to be satisfied.

The problem is that the whole thing depends on a few thousand very wealthy people sticking around. If they no longer care enough about the restaurants, museums, clubs, private schools, house parties, whatever to want to be in NYC pay taxes and spend lavishly then the whole thing falls apart. The worst part is that there’s no way to gracefully dial back—-wages and benefits are sticky.

https://mobile.twitter.com/GodCloseMyEyes/status/14150291832...

Thread about the decay in general.

Suburbaniztion in the 70s hollowed out the middle class leaving just the extremely wealthy and extremely poor. Crack epidemic and the War on Drugs and the resultant crime accelerated the exodus. With the loss of tax base the city was going bankrupt, cutting back services (like police), and the infrastructure began to rot.

It wasn't all bad. Some of my favourite artists and musicians lived in the city of that era. They were paying low rents or squatting while working on their craft.

Once the disinvestment had run its course developers swooped in and bought some of the most desirable property for cheap. New buildings went up. A generation of kids raised in the suburbs discovered cities were awesome. And those starving artists either became successful or were forced to move out.

The working poor and working class who built the city, maintained the city when everyone else walked away they were discarded. Sent to live in unfashionable suburbs hours away. Rising ever so briefly as "essential workers" while COVID wrecked the economy and ravaged the cities knowledge workers.

This is pretty much it exactly except what really gutted the artistic community wasn't pricing but HIV.

Drug use and HIV infection went hand in hand in those days and there was just so much death.

Commercially zoned real estate was at 80%+ vacancy for more than a decade. Business only concentrated in a few areas.

Most of midtown manhattan storefronts were just boarded up and covered in graffiti.

Maybe in Manhattan, but Brooklyn is booming – apartments are being snatched up in days and rents seem to be trending towards all time highs right now. "New York" is bigger than just Midtown Manhattan.

I don't think we need the FUD; Manhattan (especially midtown) will be on a bit of a downswing as some companies get rid of their office space and people switch to semi-remote work, but it will survive and thrive just fine.

Brooklyn has been booming for some time. Hell if I had piles of money, I would never buy a property in Manhattan and have to deal with tourist hell prepandemic. Brooklyn still has 'real residents' as the majority roaming about.

But New York isn't just Brooklyn either. The rest of the city and the state (especially the state) are cratering. Brooklyn, or at least the wealthy, fashionable parts can keep their heads down and act like things are great for a while but eventually poor conditions in the city will reach them.

And people will leave.

New york will just continue to become a store for capital like Miami, or the chinese ghost cities, no one will really live there. Just a place to park ill gotten cash.

I've heard that bit about the value of buildings being impacted by units with lowered rents, but I've never understood why that wouldn't also apply to units bringing in zero rent.

I'm sure there are details I don't know, but naively it seems like enforcing those same valuation consequences for empty units too would incentivize filling units.

Purchases can be made on expectations of returns based on comparable properties, or prices may be assumed based on other filled units. Filling at a lower rate definitively lowers those expectations.

On a 30 year model, small fluctuations have big consequences, and they cascade even further if there are multiple units.

> Filling at a lower rate definitively lowers those expectations

Not filling at all should too though.

It just depends on the difference between what you can get today, and what you expect to get in the future and when.

If you discount it to 80% today and then rent it at that rate for 10 years, you'll lose 10% compared to if you leave it empty for a year and rent it for 9 years at 100% of asking price. Obviously financial calculations have a lot more complexity than that, but it illustrates why someone would prefer a vacant property. It's based on expectations of future income.

And that doesn't even factor in what also happens a lot in NYC, owners wanting to redevelop. Your building sits empty for a while, as horrible as it sounds, it can speed approvals that you might not get if they were full. Never miss an opportunity to take advantage of a crisis, and a crisis like the pandemic doesn't come along very often.

The fundamental problem is everyone wants in on the big money. No one really wants to serve the lower end. And the lower end would be upper middle class in some cases in a lot of other cities. Definitely all of it will concert to make parts of NYC the exclusive domain of the wealthy soon. (Actually, parts already are, I guess I mean more parts.)

A quick CTRL+F shows nobody mentioning it, so I'm just gonna say that Louis has repeatedly stated that "Commercially Backed Mortgages" are to blame.

If I understand it correctly, basically what happens is:

1. The owner of the building takes a loan over a period of, let's say 10 years.

2. They fix the rent as such that it will be the thing that pays back this loan plus interest.

3. The bank that granted the loan creates a "Commercially Backed Mortgage" based on that loan, which is a sort of guaranteed-profit thing. Dozens to hundreds of people get in on that.

The interest on the loan being the "guaranteed profit". Considering the amount of people buying in, it's gonna be pretty high.

But because of this, based on the size of the loan and probably some other factors, rent has to be pretty high. Even unrealistic. And the kicker is: you can't lower the rent, because it's all based on that idea of "You need to produce X in Y years, no matter what".

Lowering the rent means getting 100% approval of all the people who bought into that specific mortgage, to say "your guaranteed profit is going to be lower than what you were told when you bought into this".

Which isn't going to happen.

And if you fail to get the needed amount of money, I guess the bank still pays the people who invested in the mortgage and takes the property as compensation? Perhaps fines too?

That's how I understood the explanation at least.

A tax on vacant property is an exceptional idea.

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