The Panic At­tack of the Power Bro­kers

The fu­ture of real es­tate when the city’s of­fice build­ings are empty.

New York Magazine - - FEA­TURES - By An­drew Rice

One I Yards, $25 met late-au­gust bil­lion Eliot for­mer the Spitzer lav­ishly real-es­tate New York at morn­ing, sub­si­dized de­vel­op­ment Hud­son gov­er­nor Face­book funds, firm Pfizer. that and of­fices, will the I found phar­ma­ceu­ti­cal one in­vest­ment him day house at the base draped where of an across a un­fin­ished mar­ket­ing the scaf­fold­ing skyscraper, ban­ner read ging­ham Spitzer re­set shirt, was ex­pec­ta­tions. and wear­ing book­ish a mask, horn-rimmed a green glasses. builder, busi­ness hav­ing The for­mer re­turned af­ter gov­er­nor self-de­struc­t­ing to his fam­ily’s is now realestate in pol­i­tics. He since had the been mid­dle talk­ing of the to me sum­mer, in­ter­mit­tently an­a­lyz­ing deep per­sonal the pan­demic in­vest­ment as some­one in the health with of a the com­ing city. back “I don’t to th­ese know build­ings,” when peo­ple Spitzer are said a mixed-use as we strolled pro­ject north he is to­ward con­struct­ing the site in of part­ner­ship the main de­vel­oper with the of Re­lated Hud­son Com­pa­nies, Yards. “At first, a three-week the op­ti­mists shut­down, were say­ing, and by ‘This La­bor will Day be it will be back to nor­mal.’” Now the emer­gency evac­u­a­tion had set­tled into a state of semi-per­ma­nent dis­per­sal.

That day, the city would record just 281 cases of covid-19, close to its low since the pan­demic be­gan, and life in the city’s res­i­den­tial neigh­bor­hoods had re­turned to a pleas­ant rhythm, with peo­ple dining on the side­walks and In­sta­gram­ming sun­sets in the park. But the whirring core of Man­hat­tan still felt weird and aban­doned. It was a lit­tle be­fore 11 a.m. on a week­day, and there was not a sin­gle of­fice worker in sight. Chairs were stacked on ta­bles in­side the Mai­son Kayser sand­wich shop at Hud­son Yards, where a sign on the door read closed un­til fur­ther notice. The chain was bank­rupt. So was Neiman Mar­cus, which had re­cently an­nounced it was aban­don­ing the 50-year lease on the de­part­ment store it had just opened in the Hud­son Yards mall. Only 8 per­cent of Man­hat­tan’s 1 mil­lion of­fice work­ers were now es­ti­mated to be back at their desks, com­pared with 20 or 25 per­cent in other U.S. metro ar­eas. Around Times Square, where al­most a quar­ter of the re­tail lo­ca­tions were avail­able for lease this spring, dis­or­der and va­grancy had crept into the neg­a­tive space.

The present cri­sis en­com­passes as­pects of ev­ery chal­lenge New York has faced in re­cent mem­ory. Like Sandy, it is a nat­u­ral dis­as­ter. Like the 2008 fi­nan­cial cri­sis, it has caused a surge in un­em­ploy­ment and

THE CITY’S

a“PER­MA­NENT GOV­ERN­MENT” HAS AL­WAYS BUILT ITS WAY OUT OF CRI­SIS. BUT WHAT IF IT CAN’T?

The Panic At­tack of the Power Bro­kers By An­drew Rice

poverty. Like 9/11, it is a mass-ca­su­alty event and a psy­cho­log­i­cal trauma. As in the 1970s, the city gov­ern­ment faces a fis­cal cri­sis with tax rev­enue pro­jected to plum­met. And it is all wrapped around an un­prece­dented cri­sis of au­thor­ity, which con­founds any at­tempt to or­ga­nize a re­sponse.

“We pre­sume that since New York has been the epi­cen­ter for as long as we can re­call, that there is an in­evitabil­ity to that fact,” Spitzer told me. “And yet there isn’t. This is the first mo­ment when I se­ri­ously worry about the city’s place—eco­nom­i­cally, cul­tur­ally, so­cially—be­cause the so­cial fab­ric of the city is be­ing torn apart.”

Spitzer led us to West 35th Street, where con­crete mix­ers were churn­ing out­side his de­vel­op­ment site. “See the foun­da­tion walls?” he said, as we peered through a lit­tle win­dow in the ply­wood bar­rier sur­round­ing the con­struc­tion. “That is go­ing up 50 sto­ries, and a year and a half there­after, this build­ing will be oc­cu­pied.” Phase one of the pro­ject is a res­i­den­tial tower. Phase two is the of­fice build­ing; it will need to sign an an­chor ten­ant in or­der to go for­ward. For now, that part of the site was oc­cu­pied by a white tent: a covid test­ing cen­ter.

Con­struc­tion is one of the few in­dus­tries that have con­tin­ued mostly un­abated, but his­tory shows it to be a lag­ging in­di­ca­tor. Real-es­tate projects take years to de­sign, fi­nance, and build, and they can be over­taken by un­ex­pected events. Spitzer said he was “shoring up the bul­warks” at his com­pany, slow­ing down fu­ture de­vel­op­ments un­til the econ­omy strength­ens. “If there’s a 10 per­cent drop in of­fice de­mand,” Spitzer said, “it’s go­ing to rip­ple through the mar­ket in a very real way.”

In past crises, the city has tended to build its way out of its prob­lems, of­fer­ing sub­stan­tial sub­si­dies to de­vel­op­ers and cor­po­rate ten­ants to re­vive Times Square and re­con­struct the World Trade Cen­ter. When the 2008 crash hit, the city spent hun­dreds of mil­lions of dol­lars to back­stop the fi­nances of Hud­son Yards, en­sur­ing that the most ex­pen­sive real-es­tate de­vel­op­ment in Amer­i­can his­tory would con­tinue for­ward.

Gov­ern­ment of­fi­cials saw projects like Hud­son Yards as nec­es­sary en­gines of the city’s pros­per­ity. “If you be­lieve that growth is good, Hud­son Yards is spec­tac­u­lar,” Spitzer said. Launch­ing new of­fice con­struc­tion when al­most no one is go­ing to of­fices ev­ery day may seem lu­di­crous, but that is the way New York’s po­lit­i­cal class has al­ways ap­proached the process of re­cov­ery, as­sum­ing that the city—and de­mand—will inevitably re­bound. That premise is now up for ques­tion. The longer all those sky­scrapers re­main empty, the less es­sen­tial they seem. At the same time, a new class of pro­gres­sives is suc­cess­fully cru­sad­ing against cor­po­rate power and megade­vel­op­ments. As the largest con­trib­u­tor to the city’s tax base, and a ma­jor cam­paign con­trib­u­tor, real-es­tate de­vel­op­ers have grown ac­cus­tomed to hav­ing sway over is­sues of eco­nomic de­vel­op­ment. But the in­sur­gents were open­ing the Over­ton win­dow and shov­ing them right out.

As a Demo­crat and a de­vel­oper, Spitzer was stunned by the re­ver­sal. “What’s wrong with build­ing a build­ing?” Spitzer asked, as we watched a crane lift a piece of steel up the face of the new Pfizer head­quar­ters. “Where did this city come from?”

If the en­tire real-es­tate in­dus­try is filled with anx­i­ety, there’s still a hi­er­ar­chy of dis­tress. The multi­gen­er­a­tional fam­ily com­pa­nies, like Spitzer’s, tend to be less heav­ily lever­aged, which should al­low them to ride out the pan­demic. (Or so they say—they’re ex­tremely pri­vate com­pa­nies, so who knows?) The pub­lic real-es­tate com­pa­nies are more ex­posed to mar­ket forces. SL Green Re­alty, which opened a $3 bil­lion of­fice tower next to Grand Cen­tral in Septem­ber, has seen its stock price fall by nearly half since the pan­demic hit, and its lat­est SEC fil­ings warn that the “se­vere dis­rup­tions” from covid could con­tinue to de­press rents.

More im­per­iled still are the ad­ven­tur­ous in­vestors—the ones who are build­ing condo tow­ers ca­ter­ing to for­eign bil­lion­aires or who bor­rowed heav­ily to buy high on spec­u­la­tive trends. Spitzer broke down the math: “If you bought a build­ing pre­sum­ing that you’re get­ting paid $100 a square foot—pre­sumed the next year the rent was go­ing to be $110, went to a bank and bor­rowed based upon the $110, and then sud­denly your rents go down to $70 and you need $80 in rent just to pay your mort­gage and op­er­at­ing ex­penses—you’re fin­ished.”

Also fin­ished, in all prob­a­bil­ity: any­one de­pen­dent on restau­rants, shop­ping, or tourism. Jared Kush­ner’s fam­ily firm, for in­stance, is in dan­ger of los­ing the re­tail space it owns in the old New York Times Build­ing on West 43rd Street. The state of the ho­tel in­dus­try, which has come to al­most a com­plete halt, is ru­inous. “How long can peo­ple stay sub­merged with­out run­ning out of oxy­gen?” asked Vi­jay Dan­da­pani, the pres­i­dent of the Ho­tel As­so­ci­a­tion of New York City. Around 140 of the city’s 700 ho­tels have been rented to the city as home­less shel­ters, Dan­da­pani said. Many have closed, and he es­ti­mates that “well over 100” will never re­open. Broad­way the­aters, a ma­jor tourism driver, are dark. The in­dus­try’s trade as­so­ci­a­tion an­nounced last Fri­day that it was shift­ing the tar­get date for reopen­ing to the end of the spring; a source fa­mil­iar with the plans said even that was un­re­al­is­tic, given the unique chal­lenges pre­sented by live theater. “Be­lieve me,” he said, “we are far from the­aters be­ing opened by June 1.”

Of­fice land­lords are in a com­par­a­tively in­su­lated po­si­tion, since the in­dus­try prac­tice is to sign long-term leases. But some are more vul­ner­a­ble than oth­ers. In re­cent years, many older build­ings have been repo­si­tioned for co-work­ing, which has been dev­as­tated by the pan­demic. Many small firms and start-ups have been un­able to pay rent. “There’s been a lot of pain, a lot of un­pleas­ant con­ver­sa­tions,” says a land­lord with a large num­ber of trou­bled startup ten­ants. “It’s a weird re­spon­si­bil­ity for me. You’re deal­ing with hun­dreds of th­ese peo­ple. You don’t have any real in­for­ma­tion about how to do it. On the one hand, it’s not my job to be a phi­lan­thropist, and I’m not their part­ner. On the other hand, it’s in my in­ter­est for them to survive.” He says if there’s “re­al­is­ti­cally zero or close to zero” chance of rent­ing the space for the fore­see­able fu­ture, “giv­ing them a big rent break might be psy­cho­log­i­cally scar­ring but to­tally ra­tio­nal.”

“If they don’t come up with a stim­u­lus pack­age now, the smaller ten­ants are all go­ing un­der,” says Jeffrey Gu­ral, a prom­i­nent of­fice land­lord who told me that, like many land­lords, he is now will­ing to ne­go­ti­ate. “The mar­ket has changed, and I have to ac­cept that.”

For the large cor­po­rate ten­ants that pop­u­late Man­hat­tan’s premier of­fice build­ings, there is less flex­i­bil­ity. “One of the great fic­tions out there right now is that leases con­tain trap­doors,” says Mary Ann Tighe, the head of the New York re­gion of­fice for the com­mer­cial bro­ker­age CBRE. Short of declar­ing bank­ruptcy, as Neiman Mar­cus did, there is lit­tle way for ten­ants to ex­tri­cate them­selves from their legally en­force­able leases.

That hasn’t stopped some com­pa­nies from try­ing. Condé Nast re­cently told the New York Post it was shop­ping around for new space as it asked its land­lord at One World Trade Cen­ter to bring its rent “into line with cur­rent mar­ket con­di­tions.” (The ne­go­ti­a­tions ap­pear to have gone nowhere.) In July, the law firm Simp­son, Thacher & Bartlett sued its land­lord for $8 mil­lion in a dis­pute over rent of its un­oc­cu­pied of­fices. There has been an in­crease in “shadow” of­fice space avail­able for sub­leas­ing— around 14 mil­lion square feet cur­rently, ac­cord­ing to CBRE—al­though its share of the over­all avail­able mar­ket, 25 per­cent, has not yet reached the glut lev­els seen

dur­ing the 2008 fi­nan­cial cri­sis.

“It’s phe­nom­e­nal how much com­pa­nies can spend on their real es­tate,” says Joel Stein­haus, a for­mer ex­ec­u­tive at Cit­i­group and WeWork. In New York, ac­cord­ing to one study, busi­nesses may al­lo­cate as much as $25,000 a year per em­ployee for space. What could be tak­ing shape is a sys­tem in which desks are op­tional perks that com­pa­nies of­fer to their em­ploy­ees, rather than en­ti­tle­ments that come with a job. The New York tech­nol­ogy en­tre­pre­neur Kevin Ryan, speak­ing by phone from a va­ca­tion home in France, tells me that at the height of the city’s lock­down, he closed an ac­qui­si­tion with­out one in-per­son meet­ing. (Iron­i­cally, the com­pany in ques­tion was Meetup.) Al­ready, two of the start-ups in his port­fo­lio have given up their of­fice leases in Man­hat­tan. “There is zero ques­tion that the de­mand for com­mer­cial real es­tate is go­ing to go down, and prices are go­ing to go down dra­mat­i­cally,” Ryan says. “They are kid­ding them­selves if they think it’s not go­ing to be dev­as­tat­ing. Dev­as­tat­ing.”

The longer the pan­demic goes on, the more ten­ants will have a chance to re­assess their need for ex­pen­sive of­fice space. Lit­tle won­der, then, that as soon as the in­fec­tion rates sta­bi­lized, prom­i­nent land­lords be­gan urg­ing their ten­ants to come back to the of­fice. In Au­gust, Jeff Blau, the chief ex­ec­u­tive of Re­lated, wrote a Wall Street Jour­nal col­umn say­ing that com­pa­nies had an “obli­ga­tion” to re­turn to work. “The en­tire essence of this city we all love is at stake,” he wrote.

“This is re­ally not a real-es­tate is­sue, quite hon­estly,” Blau told me. “Peo­ple who think they’re go­ing to hang out wher­ever they are—in Con­necti­cut at their par­ents’ house, in the Hamp­tons, or wher­ever—are go­ing to come back in a year ex­pect­ing to find ev­ery­thing just wait­ing for them and are go­ing to be in for a real sur­prise. Be­cause busi­nesses are not go­ing to make it un­less they come back now. Their civic re­spon­si­bil­ity is to make sure that New York is here.”

Of­fice oc­cu­pancy at Hud­son Yards re­mains stuck around 10 per­cent. For now, its ma­jor cor­po­rate ten­ants are still pay­ing their rent, and Blau said things livened up af­ter La­bor Day, when the mall and the Ves­sel re­opened. He con­tends that even the bank­ruptcy of Neiman Mar­cus had an up­side. “This was over ten years ago when we planned the re­tail, and it was a dif­fer­ent world,” he told me. De­part­ment stores are a dy­ing busi­ness, but the open Neiman floor plan, with its ter­races and es­ca­la­tors, ap­peals to the pan­demic-era de­sire for sun and ven­ti­la­tion. Re­lated is now mar­ket­ing the 380,000-square-foot space to of­fice ten­ants.

In an ef­fort to lead by ex­am­ple, many real-es­tate com­pa­nies masked up and went back to their of­fices as soon as Gov­er­nor Cuomo lifted lock­down re­stric­tions in late June. To as­suage of­fice work­ers’ fears, Re­lated in­stalled new build­ing tech­nolo­gies, such as lobby tem­per­a­ture sen­sors. At Hud­son Yards, peo­ple can sum­mon el­e­va­tors with a cell-phone app, so they don’t even have to touch but­tons.

Other com­mer­cial land­lords have been work­ing with their ten­ants to pro­vide

covid-at­tuned perks. Tish­man Speyer Prop­er­ties, which owns most of Rock­e­feller Cen­ter, has turned the plaza’s ice-skat­ing rink into an out­door dining area with food from restau­rants like the ac­claimed brasserie Frenchette. Some land­lords are ex­plor­ing of­fer­ing day-care ser­vices that can su­per­vise em­ploy­ees’ chil­dren as they go through their school day on Zoom.

“Peo­ple have to get past the point where there’s a zero risk tol­er­ance,” says Scott Rech­ler, the chief ex­ec­u­tive of RXR Re­alty, which owns some 25 mil­lion square feet of of­fice space in the New York re­gion. Rech­ler says about 90 per­cent of his com­pany’s em­ploy­ees have re­turned to its head­quar­ters un­der strict pro­to­cols en­forced via tech­nol­ogy. Fa­cial-recog­ni­tion soft­ware al­lows lobby cam­eras to mon­i­tor whether peo­ple are wear­ing masks and even whether they are pulled down be­low the nose. Em­ployee badges track the lo­ca­tions of work­ers to make sure they keep at least six feet apart. “This is the new ab­nor­mal,” Rech­ler says.

But few cor­po­rate ex­ec­u­tives seem to be­lieve it is their civic re­spon­si­bil­ity to oc­cupy the very ex­pen­sive square footage they are pay­ing rent on, es­pe­cially if it comes at the ad­di­tional cost of cre­at­ing strife in their work­force. Among other things, they have to con­sider their li­a­bil­ity if there is an out­break within their of­fices. Not ev­ery land­lord will in­vest in fancy gad­gets, and not ev­ery skyscraper can be retro­fit­ted. A large per­cent­age of New York’s build­ing stock dates back 50 or even 100 years, with cramped el­e­va­tors and un­trust­wor­thy ven­ti­la­tion.

A few in­vest­ment banks started to sum­mon traders back af­ter La­bor Day, in­clud­ing JPMor­gan, news that in­spired a con­grat­u­la­tory tweet from Don­ald Trump. Four days later, re­ports emerged that the firm had sent some em­ploy­ees home again af­ter a worker tested pos­i­tive. (Not long af­ter that, so did Trump.) Ev­ery­one wanted New York to get back to work, but wish­ing wouldn’t make it so. No one—not the pres­i­dent, not Congress, not the mayor or the gov­er­nor, not the real-es­tate in­dus­try or its in­creas­ingly em­bold­ened crit­ics—seemed to be de­vis­ing a plan to res­cue it.

“There is a sense that we are in a caul­dron right now,” Spitzer said, “with­out a lead­er­ship group.”

New york has been in the caul­dron be­fore, though our col­lec­tive mem­ory of it has faded. We are now as sep­a­rated in time from the ur­ban catas­tro­phe of the 1970s as that city was from Fiorello La Guardia and the Great De­pres­sion. So it is use­ful to be re­minded what the bot­tom re­ally looks like. Ex­o­dus? The pop­u­la­tion shrank by around a mil­lion res­i­dents dur­ing the 1970s, leav­ing en­tire neigh­bor­hoods des­o­late. Blight? There were 6,000 fires a year re­ported in Bush­wick, many of them ar­sons com­mis­sioned by land­lords for the pur­pose of col­lect­ing in­sur­ance. Deficits? In in­fla­tion-ad­justed dol­lars, the city’s to­tal bond and pen­sion debt reached nearly $100 bil­lion in the mid-1970s, and banks would no longer lend it money.

Back then, the real-es­tate fam­i­lies or­ga­nized to save the city’s gov­ern­ment—and their own fi­nan­cial in­ter­ests—by pre­pay­ing a huge chunk of prop­erty taxes, help­ing to stave off mu­nic­i­pal bank­ruptcy. The gov­er­nor ap­pointed an in­vest­ment banker named Felix Ro­hatyn to work out the city’s bond debt—it’s still be­ing paid off—and cre­ated the Fi­nan­cial Con­trol Board, which wrested au­thor­ity over the bud­get from the mayor. In­ef­fec­tive elected of­fi­cials were sup­planted by an elite group of cor­po­rate and civic lead­ers, a cadre the Vil­lage Voice jour­nal­ist Jack

“WHAT’S WRONG WITH BUILD­ING A BUILD­ING? WHERE DID THIS CITY COME FROM?”

New­field re­ferred to as the “Per­ma­nent Gov­ern­ment.” New­field did not mean it as a com­pli­ment, but the name stuck and grad­u­ally lost its crit­i­cal over­tones.

At least in its own mythol­ogy, it is the Per­ma­nent Gov­ern­ment that as­serts lead­er­ship in try­ing times. Af­ter 9/11, power over the re­build­ing of lower Man­hat­tan was handed to an­other ap­pointed au­thor­ity, led by John White­head, a re­tired chair­man of Gold­man Sachs. Dur­ing the fi­nan­cial cri­sis of 2008, Mayor Michael Bloomberg—the liv­ing em­bod­i­ment of the Per­ma­nent Gov­ern­ment—en­gi­neered a one­time sus­pen­sion of term lim­its so he could man­age the city through the cri­sis. In each case, New York emerged strong and pros­per­ous.

The key to the city’s re­siliency, the mem­bers of the Per­ma­nent Gov­ern­ment ar­gue, is its de­vo­tion above all to eco­nomic growth and real-es­tate de­vel­op­ment. It is growth that pro­duces new tax rev­enue, al­low­ing the city to pro­vide ser­vices to its cit­i­zens, mak­ing it an at­trac­tive place to live and work, cre­at­ing new growth and de­vel­op­ment. It is this cy­cle, they say, that has al­lowed Mayor de Bla­sio to gov­ern like a pro­gres­sive, in­creas­ing the city’s an­nual bud­get to a record $90 bil­lion, ex­pand­ing its work­force by some 30,000 peo­ple—many of them teach­ers for his uni­ver­sal pre-K pro­gram— and pay­ing for ameni­ties like a heav­ily sub­si­dized ferry sys­tem. With­out growth, they warn, it can all dis­ap­pear very quickly. This sum­mer, fac­ing a tax short­fall, the city cut $100 mil­lion from the San­i­ta­tion De­part­ment’s bud­get and trash started pil­ing up in the streets. De Bla­sio scram­bled to rede­ploy garbage trucks.

“Peo­ple don’t yet re­al­ize how per­ilous it ac­tu­ally is,” said Dan Doc­to­roff when I met him for a drink at Cafe Lux­em­bourg on the Up­per West Side early one evening. Doc­to­roff served as deputy mayor for eco­nomic de­vel­op­ment in the Bloomberg ad­min­is­tra­tion and has spent his life pro­mot­ing am­bi­tious de­vel­op­ment ini­tia­tives: a plan to at­tract the 2012 Olympics to New York, the re­build­ing of lower Man­hat­tan af­ter 9/11,

Hud­son Yards. He now works for Sidewalk Labs, Google’s ur­ban-plan­ning shop. I had al­ways known him to be an op­ti­mist—he wrote a book on the city ti­tled Greater Than Ever—so it jarred me when I heard he had been try­ing to rally the Per­ma­nent Gov­ern­ment to ac­tion, warn­ing the city was on the brink of “a ’70s-style” de­cline.

“We face a huge risk that the pop­u­la­tion of the city and the num­ber of peo­ple work­ing in the city will shrink by a lot,” Doc­to­roff said. “Com­pa­nies are ques­tion­ing the value of high-cost real es­tate in New York.” Mean­while, he added, “many of the driv­ers of the unique ur­ban ex­pe­ri­ence, like sub­ways and of­fice build­ings, are now viewed as risks.” Doc­to­roff sketched out his dooms­day sce­nario: Res­i­dents and com­pa­nies leave be­cause of re­sult­ing in a de­cline in tax rev­enue, forc­ing cut­backs in ser­vices, caus­ing the qual­ity of life in the city to worsen, lead­ing to more de­par­tures.

If that sounds dire, con­sider for a mo­ment that veter­ans of the 1970s cri­sis are say­ing that this one could be more threat­en­ing than the one the city faced in those days. The ur­ban rot of the 1970s was at the mar­gins; this time, it is the core that is hol­low­ing. Even in the depths of 1977, the year of the black­out and the Son of Sam, Man­hat­tan was vi­brant—“a lux­ury fan­ta­sy­land,” in the words of one con­tem­po­rary jour­nal­is­tic ac­count. Man­hat­tan boasted the head­quar­ters of a fifth of the For­tune 500 com­pa­nies, a third of the largest law firms, and al­most all of the big ad agen­cies and in­vest­ment banks. Res­i­den­tial real-es­tate val­ues rose by 30 per­cent. Celebritie­s were crowd­ing Stu­dio 54. The Yan­kees won the World Se­ries, draw­ing more than 2 mil­lion fans.

The paid at­ten­dance for the 2020 New York Yan­kees sea­son, by con­trast, will be zero. What’s more, the gov­ern­ment so far seems in­ca­pable of mus­ter­ing a re­sponse to the cur­rent cri­sis. Cuomo has taken a cau­tious ap­proach to reopen­ing, fo­cus­ing on keep­ing the pos­i­tive-test rate be­low one per­cent. De Bla­sio ap­pears to be try­ing to stag­ger along un­til Novem­ber, hop­ing for a Joe

Bi­den vic­tory and fed­eral re­lief fund­ing. The mayor has at­tempted to ad­dress the im­pact of the pan­demic by ap­point­ing ad­vi­sory boards, which have done lit­tle of con­se­quence. “No­body’s ral­ly­ing around right now,” Doc­to­roff lamented. He has been try­ing to or­ga­nize a new po­lit­i­cal group he is call­ing the Coali­tion for In­clu­sive Growth, aim­ing to raise $10 mil­lion to shape the de­bate over the is­sue ahead of next year’s city­wide elec­tion. The use of the word in­clu­sive is his way of re­pent­ing for the fail­ings of the Bloomberg era, when the ben­e­fits of eco­nomic de­vel­op­ment were dis­trib­uted un­evenly to the wealthy.

News of Doc­to­roff ’s coali­tion was greeted with some skep­ti­cism, in part be­cause the Times cou­pled its un­veil­ing with news that Stephen Ross, the founder and chair­man of Re­lated, was said to be talk­ing about rais­ing $100 mil­lion to spend in the com­ing may­oral elec­tion. The ru­mor was that Doc­to­roff was his can­di­date. Doc­to­roff says he has no in­ter­est in run­ning for mayor, and Ross later said he was com­mit­ted only to “some­one not named de Bla­sio.” But the very no­tion that the city’s most pow­er­ful realestate de­vel­oper—and a Trump fund-raiser, at that—might try to pick the next mayor sounded like some­thing cooked up at a Bridge­hamp­ton clam­bake.

“Th­ese guys have a stake in the gloomand-doom de­part­ment,” said Ali­cia Glen, the for­mer top eco­nomic-de­vel­op­ment of­fi­cial in the de Bla­sio ad­min­is­tra­tion. “Be­cause by talk­ing about how ter­ri­ble it’s go­ing to be, it le­git­imizes and em­pow­ers their vi­sion: su­per­rich white peo­ple com­ing to save the city again. I mean, that is so ob­nox­ious.”

Glen, like Doc­to­roff, is a mem­ber of the Per­ma­nent Gov­ern­ment. She used to be a man­ag­ing di­rec­tor at Gold­man Sachs and now runs a firm called MSquared, which fi­nances and builds af­ford­able hous­ing, an is­sue she han­dled for de Bla­sio. We met in Septem­ber by the foun­tain at Lin­coln Cen­ter and chat­ted on a brown­stone stoop near her home on the Up­per West Side. “I would ar­gue that fun­da­men­tally noth­ing has changed with re­spect to New York City be­ing, at the end of the day, the cen­ter for global com­merce and cul­ture,” Glen said. The ques­tion, she added, is: “How long un­til the end of day?”

Al­ready, Glen sees signs that the city is re­turn­ing to its old profit-driven ways. Op­por­tunis­tic in­vestors are look­ing at the pan­demic as a tem­po­rary dis­lo­ca­tion pro­duced by an ex­ter­nal force and are as­sem­bling huge sums of money to buy New York prop­erty. She fore­sees a com­ing “feed­ing frenzy” fo­cused on dis­tressed debts and as­sets. “When you look at the global pic­ture,

“THE BUSI­NESS COM­MU­NITY AND THE ES­TAB­LISH­MENT PO­LIT­I­CAL CLASS WILL NOT SAY IT PUB­LICLY, BUT PRI­VATELY THEY TALK LIKE THE WORLD’S GONE CRAZY.”

peo­ple are go­ing to want to buy com­mer­cial real es­tate in New York City,” Glen said. “I’m sorry, that’s the God’s hon­est truth.”

It isn’t just the vul­tures, though, that see an op­por­tu­nity. The pan­demic has unleashed a tor­rent of adap­ta­tions, some of which may be here to stay. Out­door dining is one ob­vi­ous ex­am­ple. An­other is the re­dis­tri­bu­tion of com­mer­cial ac­tiv­ity to the res­i­den­tial bor­oughs. Over the sum­mer, the Per­ma­nent Gov­ern­ment was buzzing about a long-de­bated plan to ex­pand In­dus­try City, the mas­sive ware­house con­ver­sion pro­ject along the South Brook­lyn wa­ter­front. The pri­vate de­vel­op­ers be­hind the pro­ject were propos­ing to build over a mil­lion square feet of new of­fice and re­tail space, which, they pro­jected, would cre­ate 20,000 jobs and pro­vide the city with $100 mil­lion in yearly tax rev­enue. The pro­ject, which needed no gov­ern­ment fund­ing, seemed per­fectly tai­lored to a fu­ture in which of­fices were dis­persed around the city, rather than con­cen­trated in a few dense blocks.

The pri­vately fi­nanced de­vel­op­ment re­quired a re­zon­ing, and an am­bi­tious pair of young City Coun­cil mem­bers were push­ing for its ap­proval. “That is the most hope­ful thing I have seen,” said Jonathan Rosen, a veteran Demo­cratic cam­paign strate­gist and pub­lic-re­la­tions ex­ec­u­tive. “The idea that there’s this next gen­er­a­tion of lead­ers.”

The pro­ject was op­posed by the lo­cal City Coun­cil mem­ber and ac­tivists from the Demo­cratic So­cial­ists of Amer­ica, who ar­gued that it rep­re­sented the wrong kind of wa­ter­front de­vel­op­ment. And it re­ceived lit­tle sup­port from de Bla­sio, much to the ire of the Per­ma­nent Gov­ern­ment. Glen was crit­i­cal of her old boss, ac­cus­ing him of mis­han­dling an es­sen­tial part of his job—his re­la­tion­ship with the busi­ness com­mu­nity.

“What you’re see­ing is that peo­ple are so dis­ap­pointed with the mayor’s lead­er­ship,” Glen said. A group of 163 top busi­ness ex­ec­u­tives had re­cently re­leased an open let­ter to the mayor warn­ing of “de­te­ri­o­rat­ing con­di­tions in com­mer­cial dis­tricts and neigh­bor­hoods.” At one point, when the mayor was asked whether the mu­tual an­tipa­thy had dam­aged his abil­ity to re­spond to the cur­rent cri­sis, he re­sponded by quot­ing Karl Marx. “He’s so man­aged to piss off the peo­ple that need to be the par­tic­i­pants,” Glen said. “He didn’t have a solid foun­da­tion to be­gin with, and when the chips are down, and your be­hav­ior is so dis­mis­sive, you wind up in the sit­u­a­tion where the civic in­sti­tu­tions and the busi­ness com­mu­nity are all aban­don­ing ship.”

Still, Glen re­jected the no­tion that busi­nesses and the wealthy would give up on New York. is ev­ery­where, and where are they go­ing to go? The real dan­ger, Glen ar­gued, is not that rich peo­ple will flee New York but that they will be­have so ar­ro­gantly that it drives a coun­ter­pro­duc­tive back­lash. “Don’t let the in­creas­ingly re­ac­tionary left use the pan­demic to ad­vance an anti-growth agenda,” she said. “You have the old guard feel­ing su­per-threat­ened. The new guard is try­ing to fig­ure out how to hold off the cra­zi­est left-wing stuff.”

We headed up to 72nd Street. It was that first brisk day at the end of sum­mer. The side­walks were full of peo­ple walk­ing with pur­pose. You could al­low your­self to imag­ine the pan­demic was over. That day, though, the head of the Cen­ters for Dis­ease Con­trol and Preven­tion was tes­ti­fy­ing be­fore the Se­nate, man­ag­ing ex­pec­ta­tions. He es­ti­mated that a vac­cine would be widely avail­able by mid-2021. Maybe. “Who’s go­ing to lead us out of the dark­ness?” Glen asked, be­fore de­scend­ing into the sub­way. “That’s what’s so tragic about what’s go­ing on with the mayor.”

The fu­ture of the city will de­pend in large part on three un­knowns. One is the de­liv­ery date of the still-not-yet-in­vented vac­cine. An­other is the re­sult of the pres­i­den­tial elec­tion. The third is next year’s city­wide elec­tion, when not only the mayor’s of­fice but many City Coun­cil seats will be open. In that cam­paign, the ques­tion of how the city is to be saved, and for whom, will be cen­tral.

“So much of this cri­sis of covid is about cap­i­tal­ism tak­ing away the lit­tle dig­nity that peo­ple have left,” said Zohran Mam­dani. It was 9 a.m. on a Fri­day morn­ing, and we were walk­ing down Stein­way Street, where the line out­side the makeshift As­to­ria Food Pantry ran down the block and curled around the cor­ner. Mam­dani is a 28-yearold Demo­cratic can­di­date for the New York State As­sem­bly and a mem­ber of the DSA. In April, he turned over his store­front cam­paign head­quar­ters to a group of vol­un­teers, who are us­ing it to dis­trib­ute bags of veg­eta­bles, canned goods, and other sta­ples. Mam­dani has had less use for an of­fice since he un­seated an in­cum­bent in the Demo­cratic Party pri­mary in June, all but as­sur­ing that he will go to Al­bany next year.

Mam­dani was wear­ing a KN95 mask, a pat­terned Nehru-col­lared shirt, and groovy sneak­ers. He was born in Uganda, and we were in­tro­duced by his fa­ther, Mah­mood, a scholar of African pol­i­tics at Columbia Uni­ver­sity. (His mother (Con­tin­ued on page 102)

is the film di­rec­tor Mira Nair.) He moved to As­to­ria two years ago, al­though he says that as a Mus­lim im­mi­grant with fam­ily in the neigh­bor­hood, he feels “this place has been home much longer than that.” He worked as a fore­clo­sure-preven­tion coun­selor and put his op­po­si­tion to the real-es­tate de­vel­op­ers at the fore­front of his cam­paign, promis­ing not to ac­cept money from the in­dus­try and pledg­ing to fight its “per­ni­cious in­flu­ence” in pol­i­tics. “We need to rec­og­nize re­al­ity for what it is,” Mam­dani said. “Which is that there was a cri­sis that ex­isted be­fore this pan­demic hit.”

Mam­dani’s vic­tory was part of a wave of DSA up­sets that be­gan with Alexan­dria Oca­sio-Cortez and has since shaken up New York’s po­lit­i­cal fir­ma­ment. “The busi­ness com­mu­nity and the Es­tab­lish­ment po­lit­i­cal class will not say it pub­licly, but pri­vately they talk like the world’s gone crazy,” said Vishaan Chakrabart­i, an ar­chi­tect and for­mer city-plan­ning of­fi­cial. Like many oth­ers, Chakrabart­i sug­gested that the ide­o­log­i­cal at­tacks from the left on eco­nomic de­vel­op­ment were naïve—and even dan­ger­ous—in the con­text of a deep re­ces­sion. “I don’t think it’s cen­trism; it’s just un­der­stand­ing how things work,” he said. “It’s ma­tu­rity.”

Mam­dani told me he is well aware of how bad things are. “That food-pantry line is not get­ting smaller; it’s get­ting larger,” he said. He be­lieves, how­ever, that the pan­demic of­fers an op­por­tu­nity to imag­ine an­other city. “What’s so ex­cit­ing about the po­ten­tial of this mo­ment is that it al­lows us to cre­ate a new world,” Mam­dani said. “There are so many of th­ese think pieces about how ‘New York is dead.’ And there are as­pects of New York that must die.” One of them, he said, is the no­tion that city gov­ern­ment should ex­ist to serve busi­ness in­ter­ests un­der the pre­text of cre­at­ing eco­nomic growth. “That idea,” he added, “of so­cial­ism for the wealthy, rugged cap­i­tal­ism for the many, is some­thing that must die.”

We walked down a street blocked off for out­door so­cial­iza­tion, pass­ing a pair of women do­ing Pi­lates. “As­to­ria is very much alive,” Mam­dani said. We stopped at a bodega, where he got a cof­fee and an eggand-cheese, and con­tin­ued our con­ver­sa­tion on the street, stand­ing in one of those cute wooden sukkah-like struc­tures that have been constructe­d for out­door dining. “This is some­thing that came about be­cause of the pan­demic, and we need to keep it,” Mam­dani said, re­flect­ing on the open-air sum­mer as well as emer­gency-aid mea­sures like free bus tran­sit. “The things that we like, that re­main af­ter the pan­demic, will be the things that we fight for. If we just sit back, it will be cap­i­tal that de­ter­mines the fu­ture of the city.”

Hear­ing this kind of talk, Cap­i­tal, it’s fair to say, is freak­ing out. “I agree that the wind is at their backs in terms of them be­com­ing more po­lit­i­cally pow­er­ful,” Glen told me. “But what I’m strug­gling with is, What will they do when they get there? It’s not a game. Peo­ple’s lives are at stake.” Spitzer wryly re­called a time, an era ago, when he was an at­tor­ney gen­eral cru­sad­ing against cor­rup­tion on Wall Street. “Everybody thought I was the bane of cap­i­tal­ism,” he said. “I said, You don’t get it. I’m here to pro­tect cap­i­tal­ism.” Now, as a de­vel­oper, he’s the left’s en­emy.

“Growth is to eco­nom­ics what the law of evo­lu­tion is to sci­ence,” Spitzer said. “Growth and progress are what lift those at the bot­tom.” Politi­cians and ac­tivists like Mam­dani ask what tan­gi­ble ben­e­fit the peo­ple lin­ing up on Stein­way Street have seen from the gov­ern­ment’s es­ti­mated $6 bil­lion in sub­si­dies for Hud­son Yards. “It’s high time that real-es­tate de­vel­op­ers feel un­ap­pre­ci­ated, be­cause they’ve been ap­pre­ci­ated for too long,” Mam­dani said. The DSA’s vic­to­ries this year, he added, are only a pre­lude to the com­ing bat­tle in 2021: “I think that’s what they’re ter­ri­fied of. Fi­nally, they’re meet­ing an equal and op­po­site force.”

Not long af­ter my walk with Mam­dani, that force came down hard on the de­vel­op­ers of In­dus­try City, who an­nounced they were scrap­ping their ex­pan­sion plan af­ter op­po­si­tion from the DSA and neigh­bor­hood groups prompted elected of­fi­cials to come out against the pro­posal. The pro­ject’s back­ers were in­fu­ri­ated. “The new gen­er­a­tion of pro­gres­sive elect­eds don’t have a sense of how dire this is,” said Rosen. “There is no su­per­man wait­ing in the wings. And while de­mands for equity are to­tally fair and in many ways long over­due, the com­pla­cency about rev­enue is frankly ter­ri­fy­ing, as some­one who con­sid­ers my­self a big­gov­ern­ment purist.”

A few days af­ter the de­feat, I called up the leader of the com­mu­nity group

up­rose, El­iz­a­beth Yeampierre, an at­tor­ney and ac­tivist in the cli­mate-jus­tice move­ment. She had ar­gued that wa­ter­front de­vel­op­ment should be re­stricted to pro­mote en­vi­ron­men­tal re­siliency and “green in­dus­trial” uses, rather than of­fice space and what she calls a “Chelsea/Wil­liams­burg vi­sion” of re­tail. “We’ve been hear­ing, ‘How can th­ese peo­ple turn away from th­ese jobs in the mid­dle of covid?’” Yeampierre told me. “Well, are you in your of­fice right now or are you at home?” I was at home. “Peo­ple are not go­ing back to their of­fices,” she pre­dicted.

Ac­tu­ally, when I’d vis­ited In­dus­try City a few weeks be­fore the plan fell apart, An­drew Kim­ball, the for­mer city of­fi­cial who is run­ning the pro­ject for its pri­vate de­vel­op­ers, told me that it was com­ing back to life, rel­a­tively speak­ing. Be­cause many of its ten­ants were in light man­u­fac­tur­ing and other hands-on busi­nesses, about half of the roughly 8,000 work­ers had re­turned. He was even do­ing some leas­ing. Whole Foods had taken a 25,000-square-foot space for its first on­line-only store, where paid shop­pers pick out gro­ceries for de­liv­er­ies.

“How could we not sup­port this at a mo­ment when we are look­ing at 25 per­cent un­em­ploy­ment?” Kim­ball asked. We met up out­side the ren­o­vated part of the ware­house com­plex. The scene in­side was, in fact, a lit­tle Wil­liams­burg-y. Kim­ball showed me a candy store where masked work­ers were mak­ing choco­lates on a con­veyor belt, a high-end tat­too par­lor, a shop sell­ing raw honey, a whiskey dis­tillery, and a dark­ened co-work­ing space. “The covid tour is not as ex­cit­ing,” he said apolo­get­i­cally. Around 90 per­cent of In­dus­try City’s ten­ants are small busi­nesses, em­ploy­ing fewer than ten peo­ple, and many were barely sur­viv­ing on emer­gency fed­eral loans, which were run­ning out.

We went up­stairs into the airy, open-plan of­fice of an en­gi­neer­ing firm. It was filled with mod­els and di­a­grams of jobs in progress be­fore the lock­down. A sad cac­tus sat droop­ing on a long gal­ley-style desk. Work­ers had left their pens and pa­pers neatly ar­ranged. Some­one’s back­pack was lean­ing against a desk chair. Taped over each com­puter mon­i­tor was a sheet of paper read­ing work­sta­tion closed.

Look­ing out a win­dow to­ward the har­bor, Kim­ball pointed out the sights: the new space for Steiner Stu­dios, the Brook­lyn Nets prac­tice fa­cil­ity, the sites that would have be­come of­fice build­ings if the city had ap­proved his plan. Of course, it was hard to say when there would be de­mand for that of­fice space. Kim­ball di­rected my at­ten­tion to a huge park­ing lot, where a bunch of white trac­tor-trail­ers were parked. “That’s the South Brook­lyn Marine Ter­mi­nal,” he said, which is slated to be re­de­vel­oped as part of a state-fi­nanced off­shore wind­power pro­ject. For now, though, it’s be­ing used as the city’s tem­po­rary morgue. Lately, Kim­ball said, there had been less ac­tiv­ity around the morgue. But the trail­ers are still wait­ing there, ready for the fall.

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