By: Rusty Brooks
“The tech sector has been a cash cow for real estate for a decade,” said Jonathan Bowles, executive director of the Center for an Urban Future, a research group that in April published a study on the topic. “With a lot more companies pulling back, furloughing people and putting off expansion plans, it will affect the real estate market”, Crain’s reported
Most technology companies in NYC are start ups and the pandemic is deeply affecting their bottom line.
Midtown South is the heart of New York’s tech scene, which accounts for more than 300,000 jobs and has attracted more than $3 billion in venture capital annually in recent years, Crain’s reported.
“We have a few companies that have vowed to never go back to a physical office,” said Brad Svrluga, a co-founder of Primary Venture Partners, which has invested in about 50 startups. “They feel like they’re being at least as productive remotely, and they just can’t justify the costs.”
Crain’s does point out, rental prices for offices have been flat the last year.
The pandemic could change the landscape forever in NYC. Working from home can become a permanent fixture, the expensive office spaces will be in far less demand. Essentially NY is facing an existential crisis due to the hard-line shutdowns and there is a possibility it may never recover.
Meanwhile NY Times reported: Across New York City, commercial tenants are falling behind in rent at unprecedented rates as the coronavirus outbreak has caused a nearly complete lockdown of the city for two months.
The Times elaborated: The cascading impact of the coronavirus pandemic and stay-at-home orders on New York City have reached a breaking point, property owners and developers say. Two months into the crisis, the steep drop in rental income now threatens their ability to pay bills, taxes and vendors — a looming catastrophe for the city, they warn.
Meanwhile the residential real estate market is changing too. Numerous reports show people snatching up homes in nearby parts of Connecticut.
Real estate agents told the Stamford Advocate that their well-to-do New York City clients have been snapping up single-family homes in areas like Westport, Greenwich, Litchfield County and east of New Haven.
“I think there’s going to be a trend of people renting and then buying second homes,” Candace Adams, CEO of Berkshire Hathaway Home Services New England Properties, told the Advocate. “I don’t know that they necessarily want to stay outside of the city — they just want to have an option to go someplace else.”
Two months of shutting down an entire city, has rapidly changed everything. Will NYC ever be the same?