New York City’s biggest landlords have a major dilemma; that is, companies like Citigroup, JP Morgan, Google, Twitter, and Facebook all encouraged their employees to work remotely from home, which will result in a slower economic recovery.
Jeff Blau, chief executive officer of Related Cos., was on Bloomberg Television Thursday talking about the dire situation, and the campaign he is waging, along with other top landlords to convince companies that their employees should return to offices to avoid damaging the local economy.
“If you go to the business districts, Midtown, it’s deserted,” Blau said “If employers tell their employees that they don’t need to come back, they’re going decide to hang out at their parents’ or in the Hamptons and phone it in. Ultimately, businesses are not going to be able to survive that.”
Blau said big banks are bringing a new wave of recruits into the city this fall that will require them to work in offices. He said he’s spoken with top firms in the town, asking them to return their workforce to offices.
“You can’t run a business on Zoom,” he said.
Earlier this month, former hedge fund manager James Altucher told Fox Business that New York City is dead:
“We have something like 30 to 50 percent of the restaurants in New York City are probably already out of business, and they’re not coming back,” Altucher said.
He said many offices in Midtown Manhattan are open but mostly empty as remote working has allowed employees to abandon the city for suburbia.
“This completely damages not only the economic eco-system of New York City…but what happens to your tax base when all of your workers can now live anywhere they want to in the country?” asked the fund manager.
Altucher warned the situation is “only going to get worse” – as Wall Street firms are now considering a mass exodus.
When firms break their lease, or let ones expire, and or shrink their corporate footprint, rental income for landlords like Blau will see declines, and if their portfolio of buildings is highly leveraged, it could result in, as we explain in “Stunning Surge In New CMBS Delinquencies Heralds Commercial Real Estate Disaster,” the coming commercial real estate bust.
Blau and other landlords are waging war against remote working. The big question: Will they succeed?