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    Warehouses Transform N.Y.C. Neighborhoods as E-Commerce Booms

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    The region is home to the largest concentration of online shoppers in the country. The facilities, key to delivering packages on time, are reshaping neighborhoods.An e-commerce boom turbocharged by the pandemic is turning the New York City region into a national warehouse capital.In just two years, Amazon has acquired more than 50 warehouses across the city and its surrounding suburbs. UPS is building a logistics facility larger than Madison Square Garden on the New Jersey waterfront near Lower Manhattan.In Brooklyn, Queens and the Bronx, 14 huge warehouses to help facilitate e-commerce operations are rising, including multistory centers previously found only in Asia.Fueled by the soaring growth of e-commerce while so many Americans have been working from home, online retailers, manufacturers and delivery companies are racing to secure warehouses in the country’s most competitive real estate market for them.Every day, more than 2.4 million packages are delivered just in New York City, an online-buying mecca in a region of 20.1 million people.The feverish activity has already transformed the landscape of city neighborhoods and rural towns, transforming Red Hook in Brooklyn into a bustling logistics hub and replacing farmland in southern New Jersey with sprawling warehouses where packages are sorted, packed and delivered, often within hours of being ordered.An Amazon grocery hub in Red Hook, Brooklyn, which has emerged as a nexus of e-commerce warehouses in New York because it offers relatively easy access to Lower Manhattan, Queens and the rest of Brooklyn.Clark Hodgin for The New York TimesJust 1.6 percent of all warehouses in New York City and only 1.3 percent in New Jersey are available for lease, according to the real estate firm JLL; only the Los Angeles area has fewer warehouse vacancies in the United States. Some companies are converting buildings never intended to be warehouses. Amazon turned a shuttered supermarket in Queens into a makeshift package hub.The soaring demand for warehouses, once the ugly duckling of the real estate industry, underscores their pivotal role in a complex global supply chain. Nationwide, developers are pouring billions of dollars into the construction of new facilities, helping lift the commercial real estate sector, which has been battered by the emptying of offices during the pandemic.But the rise of warehouses has also sparked significant opposition. While they provide jobs and can lower residential property taxes by contributing to the local tax base, people across the region say the large hubs will lead to constant flows of semi-trucks and delivery vans that will worsen pollution and traffic congestion.Understand the Supply Chain CrisisThe Origins of the Crisis: The pandemic created worldwide economic turmoil. We broke down how it happened.Explaining the Shortages: Why is this happening? When will it end? Here are some answers to your questions.A New Normal?: The chaos at ports, warehouses and retailers will probably persist through 2022, and perhaps even longer.A Key Factor in Inflation: In the U.S., inflation is hitting its highest level in decades. Supply chain issues play a big role.They have also bemoaned the loss of open land to mega facilities. In recent months, residents in the southern New Jersey township of Pilesgrove, just across the Delaware River from Wilmington, Del., protested plans for a 1.6 million square-foot warehouse — larger than Ellis Island — on former farmland.While Amazon, major retailers and logistics operators such as UPS, FedEx and DHL dominated the initial wave of warehouse deals at the start of the pandemic, interest is now coming from smaller businesses seeking greater control of their supply chain amid a global bottleneck in the movement of goods.“I’ve been doing this for 30-some-odd years, and I’ve never seen it like this,” said Rob Kossar, a vice chairman at JLL who oversees the company’s industrial division in the Northeast. “In order for tenants to secure space, they are having to negotiate leases with multiple landlords on spaces that aren’t even available. It’s insane what they are having to do.”The rising cost to lease facilities has frustrated some small business owners who cannot compete with retail and logistics giants, as well as newcomers like Tesla and Rivian, which have opened showrooms and service centers for their electric vehicles in Brooklyn warehouses. Leasing prices for warehouses in the Bronx, for instance, have jumped 22 percent since the pandemic started.Warehouse jobs are still just a fraction of New York City’s labor force, but companies are on a hiring spree. Since 2019, the number of warehouse jobs doubled to 16,500 positions in late 2021. New hires at Amazon make around $18 an hour and get starting bonuses up to $3,000. But the company has also been fighting workers at some of its warehouses, including on Staten Island, who are trying to unionize to improve working conditions.Prose employs about 150 employees at its facility in Brooklyn from where it ships products across the United States and to Canada.Clark Hodgin for The New York TimesToday, nearly everything — from cars to electronics and groceries to prescription drugs — can be ordered online and arrive in as little as a few hours. In New York City, new companies are offering 15-minute grocery delivery.And though most retail sales nationwide still happen at brick-and-mortar stores, online sales are increasing at breakneck speed, growing by 50 percent over the last five years to reach 13 percent of all retail purchases, according to the census.That surge is pummeling many retailers, especially smaller businesses, that have also had to weather the loss of customers during the pandemic.At the onset of the pandemic shoppers switched to online buying at a rate that had been expected to take a decade to reach, according to analysts.Some large retailers, such as Target and Best Buy, that have a handful of warehouses in the region lean on their stores to fulfill online orders. Wal-Mart, the nation’s largest retailer, does not have a store in New York City so it uses a warehouse in Lehigh Valley, Pa., just over the border from New Jersey, and stores in surrounding suburbs to serve city residents.Amazon is taking a different approach. Across New Jersey to the northern New York City suburbs to Long Island, Amazon is cobbling together a sprawling network of fulfillment centers, package-sorting facilities and last-mile hubs. In the city it has set up a handful of facilities in the Red Hook and Sunset Park neighborhoods of Brooklyn.Amazon’s rapid expansion is not unique to the New York area. Last September alone, Amazon said in a recent earnings call, it added another 100 facilities to its delivery network in the United States.Red Hook, a neighborhood of just under a square mile bounded by water on three sides, has become a center for warehouses in the city because it is near major roadways into population centers in other parts of Brooklyn, Lower Manhattan and Queens.The owner of Prose decided to keep all his manufacturing under one roof before the supply chain problems emerged. “It has been a great decision,” he said.Clark Hodgin for The New York TimesAt least three new warehouses have opened in the neighborhood and more could be on the horizon. UPS paid $300 million for a 12-acre property, and two developers of logistics centers spent $123 million in December to buy several industrial sites there.How the Supply Chain Crisis UnfoldedCard 1 of 9The pandemic sparked the problem. More

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    Big Tech Makes a Big Bet: Offices Are Still the Future

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    TEMPE, Ariz. — Early in the pandemic, when shops along Mill Avenue in downtown Tempe closed their doors and students at nearby Arizona State University were asked to go home, the roar of construction continued to fill the air. Now, gleaming in the sunlight and stuffed with amenities, towering glass office buildings have sprouted up all over the Phoenix metropolitan area.Arizonans are about to have new next-door neighbors. And they include some of the technology industry’s biggest names.DoorDash, the food delivery company, moved into a new building on the edge of a Tempe reservoir in the summer of 2020. Robinhood, the financial trading platform, rented out a floor in an office nearby. On a February morning, construction workers were putting the finishing touches on a 17-story Tempe office building expected to add 550 Amazon workers to the 5,000 already in the area.The frenetic activity in the Phoenix suburbs is one of the most visible signs of a nationwide recovery in commercial office real estate fueled by the tech industry, which has enjoyed unchecked growth and soaring profits as the pandemic has forced more people to shop, work and socialize online.Big tech companies like Meta and Google were among the first to allow some employees to work from home permanently, but they have simultaneously been spending billions of dollars expanding their office spaces. Doubling down on offices may seem counterintuitive to the many tech workers who continue to work remotely. In January, 48 percent of people in computer and math fields and 35 percent of those in architecture or engineering said they had worked from home at some point because of the pandemic, according to the Bureau of Labor Statistics.But companies, real estate analysts and workplace experts said several factors were propelling the trend, including a hiring boom, a race to attract and retain top talent and a sense that offices will play a key role in the future of work. In the last three quarters of 2021, the tech industry leased 76 percent more office space than it did a year earlier, according to the real estate company CBRE.A view of Camelback Mountain and Papago Park in Phoenix from 100 Mill. Adam Riding for The New York Times“I think there are a lot more companies that are saying, ‘You’re coming back to work’ — it’s not ‘if,’ it’s ‘when,’” said Victor Coleman, the chief executive of Hudson Pacific Properties, a real estate investment group. “The reality is that most companies are currently working from home but are wanting and planning to come back to the office.”Debates over whether workers should be required to return to the office can be thorny because some employees say they have been happier and more productive at home. One way companies are trying to lure them back is by splurging on prime office space with great amenities.Big Tech executives say that office expansions are to be expected and that modernized buildings will probably be spaces for people to collaborate rather than stare at screens. Meta, the parent company of Facebook, leased 730,000 square feet in Midtown Manhattan in August 2020, and has added space in Silicon Valley as well as in Austin, Texas; Boston; Chicago; and Bellevue, Wash.“We will continue to grow and expect many people to return to our offices around the world once it’s safe,” said Tracy Clayton, a Meta spokesman.Big Tech executives anticipate more office expansions, another sign that companies are shifting their expectations for employees.Adam Riding for The New York TimesGoogle said early last year that it would spend $7 billion on new and expanded offices and data centers around the country in 2021, including $2.1 billion to buy a Manhattan office building by the Hudson River, and growth in Atlanta; Silicon Valley; Boulder, Colo.; Durham, N.C.; and Pittsburgh. Google also said in January that it would spend $1 billion on a London office building.Offices “remain an important part of supporting our hybrid approach to work in the future,” Google said in a statement.During the pandemic, Microsoft has expanded in Houston; Miami; Atlanta; New York; Arlington, Va.; and Hillsboro, Ore. The company was growing to accommodate the many new employees it has hired over the last two years, said Jared Spataro, the vice president of modern work for Microsoft.“The pandemic, I think, has just changed people’s perception of what’s possible in terms of geographic distribution,” Mr. Spataro said.In April, Apple said it would build a campus near Raleigh, N.C., and has added space in San Diego and Silicon Valley. The company, which has battled with its employees over its plan for a majority of workers to return to offices most days each week, referred to its April news release about expansion but declined to comment further.Salesforce, whose signature tower looms over the San Francisco skyline, is moving forward with four new office towers planned before the pandemic, in Tokyo, Dublin, Chicago and Sydney, Australia. The company said last February that many employees could be fully remote, but shifted its messaging months later, saying that “something is missing” without office life and urging workers to come back in.Salesforce’s thinking about the office has evolved, said Steve Brashear, the company’s senior vice president in charge of real estate. At the start of the pandemic, the feeling was that “being remote sounds so great and so safe,” Mr. Brashear said. Now, “the idea of being isolated as a remote worker has its drawbacks.”The rooftop deck at Grand 2, where DoorDash employees work. Tech companies have tried to coax their workers back to the office by offering amenities.Adam Riding for The New York TimesThe industry’s search for land has been so extensive that it has surged through longtime tech hubs like Silicon Valley and into areas not traditionally known for their tech scenes.In Phoenix, for instance, tech leasing activity grew more than 300 percent from mid-2020 to mid-2021. New leases, subleases and renewals in the area totaled more than one million square feet from April through September last year, up from about 260,000 square feet a year earlier, according to CBRE.Other locations not normally associated with tech also saw growth. In Vancouver, British Columbia, tech leasing activity doubled in growth in mid-2021, to 561,000 square feet from 268,000, as did activity in Charlotte, N.C., to 143,000 square feet from 71,000.Amazon has been one of the most prolific in expansion, announcing in 2020 that it would increase its white-collar work force in half a dozen cities. In Phoenix, its logo is ubiquitous, and it will occupy five floors in the new Tempe office building expected to be finished this year.Holly Sullivan, Amazon’s vice president of economic development, said adding to its regional hubs allowed the company “to tap into wider and more diverse talent pools, provide increased flexibility for current and future employees, and create more jobs and economic opportunity across the country.”For developers, the focus on offices is good for business, and some interpret the growth as an indictment of the fully remote model.The thinking on remote work is “like a pendulum — it swung a little bit too far, and now it’s come back a little bit,” said George Forristall, the Phoenix real estate director at Mortenson Development.The Watermark office building at the edge of Tempe Town Lake, home to WeWork, Robinhood and some Amazon employees.Adam Riding for The New York TimesThe flurry of expansions also highlights how much better tech has fared than other industries during the pandemic. In some cities, remote work and high vacancy rates continue to hurt restaurants and retailers.Office vacancy rates in San Francisco climbed to 22.4 percent at the end of 2021 from 21.5 percent in the third quarter of the year, according to Jones Lang LaSalle, a real estate firm. The city’s economists called tourism and office vacancies “special areas of concern in the city’s economic outlook.” In New York, office vacancy rates declined to 14.6 percent, according to JLL, but areas dependent on office workers to power local businesses, like Midtown Manhattan, are recovering more slowly.Smaller tech companies, given their financial constraints, might have to choose whether to invest in physical spaces or embrace a more flexible strategy. Twitter has continued to add offices in Silicon Valley, and video game developers like Electronic Arts and Epic Games have expanded in places like Canada and North Carolina. But others have cut back.Zynga, a gaming company, offered up its 185,000-square-foot San Francisco headquarters for sublease last summer because it decided that shrinking its physical office and moving would make life easier for employees, said Ken Stuart, vice president of real estate at Zynga. Its new building in San Mateo, Calif., will be less than half the size.“The reality is that people are frustrated by the commute and getting into the city, and also people feel like they can do better work by being hybrid,” Mr. Stuart said.By contrast, the largest tech giants “have so much money that it doesn’t matter,” said Anne Helen Petersen, a co-author of “Out of Office,” a recent book about the remote-work era. Because of their huge budgets, Ms. Petersen suggested, such companies can continue constructing offices without worrying about how much money they stand to lose if the buildings become obsolete.“They’re hedging their bets,” Ms. Petersen said. “If the future’s going to be fully distributed, ‘we’ll be setting up an apparatus for that.’ If the future’s going to rubber-band back to everyone back to the office, the way it was in 2020, ‘we’ll go back to that.’”In Tempe, the two-floor WeWork co-working space at the Watermark, one of the premier office spaces, was buzzing with activity on a recent afternoon. Upstairs, Amazon has rented an entire floor.Below, amid leafy plants and colorful lighting, employees at tech start-ups clacked away on MacBooks and sketched on whiteboards. Many said it had become more crowded in recent months, and more companies were renting the small office spaces within the WeWork.The WeWork co-working space at Tempe’s Watermark office. Tech employees there say more people have been coming in and leasing space in recent months.Adam Riding for The New York TimesSam Jones, a co-founder of a nonfungible token start-up, Honey Haus, said his company had been renting a four-person space within WeWork for $1,850 a month since October.“I am just way less productive at home,” Mr. Jones said. “People are definitely, I think, realizing that physical space just has something special to it.” More

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    The Next Affordable City Is Already Too Expensive

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    Maybe it was the date night when he and his wife spent two hours driving 19 miles to dinner, or the homeless encampment down the street, or the fact that homes were so expensive that his children could never afford to live near him.Whatever the reasons, and there were many, Steve MacDonald decided he was done with Los Angeles. He wanted a city that was smaller and cheaper, big enough that he could find a decent restaurant but not so much that its problems felt unsolvable and every little task like an odyssey. After the pandemic hit and he and his wife went through a grand reprioritizing, they centered on Spokane, where their son went to college. They had always liked visiting and decided it would be a nice place to move.Eastern Washington was of course much colder. Until this winter, Mr. MacDonald, a native Southern Californian, had never shoveled snow. But their new house is twice as big as their Los Angeles home, cost less than half as much and is a five-minute commute from City Hall, where Mr. MacDonald works as Spokane’s director of community and economic development.He arrives each day to tackle a familiar conundrum: how to prevent Spokane from developing the same kinds of problems that people like him are moving there to escape.“I’m realizing more and more how important the future prosperity of this city is about getting housing right,” he said. “If we don’t, it’s going to track more closely with what happened in Los Angeles.”Mr. MacDonald knows the pattern, and so does everyone else who has been following the frenetic U.S. housing market for the past decade. The story plays out locally but is national in scope. It is the story of people leaving high-cost cities because they’ve been priced out or become fed up with how impossible the housing problem seems. Then it becomes the story of a city trying to tame prices by building more housing, followed by the story of neighbors fighting to prevent it, followed by the story of less expensive cities being deluged with buyers from more expensive cities, followed by the less expensive cities descending into the same problems and struggling with the same solutions.It’s easier to change where we live than it is to change how we live.Whether it’s Boise or Reno or Portland or Austin, the American housing market is caught in a vicious cycle of broken expectations that operates like a food chain: The sharks flee New York and Los Angeles and gobble up the housing in Austin and Portland, whose priced-out home buyers swim to the cheaper feeding grounds of places like Spokane. The cycle brings bitterness and “Don’t Move Here” bumper stickers — and in Spokane it has been supercharged during the pandemic and companies’ shift to remote work.No matter how many times it happens, no matter how many cities and states try to blunt it with recommendations to build more housing and provide subsidies for those who can’t afford the new stuff, no matter how many zoning battles are fought or homeless camps lamented, no next city, as of yet, seems better prepared than the last one was.Just a few years ago, a Spokane household that made the median income could afford about two-thirds of the homes on the market, according to Zillow. Now home prices are up 60 percent over the past two years, pricing out broad swaths of the populace and fomenting an escalating housing crisis marked by resentment, zoning fights and tents.Nadine Woodward, the mayor of Spokane, Wash., said the city might be too expensive even for her own son and his wife.Rajah Bose for The New York TimesBeing an “it” place was something Spokane’s leaders had long hoped for. The city and its metropolitan region have spent decades trying to convince out-of-town professionals and businesses that it would be a great place to move. Now their wish has been granted, and the city is grappling with the consequences.The Great ReadMore fascinating tales you can’t help but read all the way to the end.Garage doors, a straightforward finishing touch, have become a source of woe for the home-building industry, thanks to supply-chain issues.Was the “Russian flu” of the late 19th century actually a pandemic driven by a coronavirus? And could its course give us clues about our pandemic?Our reporter hid seven tracking devices in her husband’s belongings to see how invasive they were and which ones he would find.Growth is never perfect, and Spokane’s influx has been accompanied by a booming employment market that has increased wages, turned abandoned warehouses into offices and helped the city recover jobs lost during the pandemic. This is normally called progress. But for people who already lived in and around Spokane or the suburbs just across the border in north Idaho, the shift from living in a place that was broadly affordable to broadly not has come on with the suddenness of a car crash. Now many workers are wondering what the point of growth is if it only makes it harder to keep a roof over their head.Even the mayor isn’t immune. In an interview, Nadine Woodward, a Republican who was elected in 2019, noted that her son and daughter-in-law, newlyweds who moved home during the pandemic, were living with her and her husband while they figured out where they could afford to settle. They came back to Spokane from Seattle, where they were long ago priced out. Austin was the next city on their list, but then its home prices shot up to about where Seattle’s were when they left. At this point, even Spokane is seeming pricey.“I never thought I’d see the day where my adult children couldn’t afford a home in Spokane,” Ms. Woodward said.Between Seattle and MinneapolisStanding by a snow-covered lawn on an overcast afternoon, Steve Silbar, a local real estate agent who has been selling homes for five years, explained Spokane’s transformation in terms of a six-inch screen. When he thinks of a typical buyer, Mr. Silbar said, he imagines a couple thousands of miles away, perhaps on a beach, looking at their phones. They’re considering moving to a cheaper city, and do a search for homes.Clients like this are why Mr. Silbar invested $3,000 in a camera that allows him to create three-dimensional tours of his listings, and why the exterior of every home he sells is showcased with an aerial video shot by a drone. In a market that attracts so many outsiders, a virtual walk through the interior and bird’s-eye flight over the street can be the nudge buyers need to bid on a home they’ve never entered, in a city they’ve never seen.“I have to assume that the person that is looking at my listing has never been to Spokane, does not know about Spokane, has no clue,” Mr. Silbar said.Steve Silbar, a real estate agent, showing a home in Spokane. He relies on virtual methods to help buyers from outside the region.Rajah Bose for The New York TimesSpokane is the largest city on the road from Seattle to Minneapolis. This fact is frequently cited as the logic behind its economy: It’s between things. The city was incorporated in 1881 and grew into a transportation hub for the surrounding mining and logging industries. It remains a hub, only instead of shipping out timber and silver, businesses revolve around Fairchild Air Force Base and a collection of hospitals and universities that draw from the rural towns that stretch from eastern Washington to northern Idaho and into western Montana.The transition from past to present plays out across a skyline in which the usual collection of anonymous bank and hotel towers is broken up by historic brick buildings that seem to be either in a state of abandonment or rehabilitation or occupied by low-rent tenants while waiting for redevelopment. The current boom has already made its mark in the form of new apartment towers, warehouses turned office buildings and an empty lot that will soon contain a 22-story building that will be the city’s tallest.Driving around town, Michael Sharapata, a commercial real estate broker who moved to Spokane from the Bay Area in 2017, gave a staccato accounting of new leases, such as the millions of square feet that Amazon occupies out by the airport, or the satellite offices rented by various regional accounting and building firms.His family is coming, too. After Mr. Sharapata and his wife moved north, they were followed, in rapid succession, by his brother-in-law in Austin, another brother-in-law in the Bay Area and his sister-in-law in Salt Lake City.“We were looking for an affordable community that had an opportunity to accommodate all of us,” he said.As in most of urban America, much of the growth in the Spokane area is on the fringes, where heavy equipment and the skeletal outlines of new subdivisions unfold in every direction and into Idaho. Building permits have surged, and the cadre of mostly local builders who had the market more or less to themselves now grumble that the rapid growth has attracted big national builders like D.R. Horton and Toll Brothers.All of this happened fairly recently. In the years after the Great Recession, when homebuilders were in bankruptcy or hibernation, migration to the Spokane region plunged. That pattern shifted in 2014 when, as if a switch had been flipped, waves of migrants started arriving as already high-cost cities like Seattle and San Francisco saw their housing markets go into a tech-fueled frenzy.By the end of 2014, migration to the Spokane region had jumped to more than 2,000 net new residents, compared with a net loss the year before, according to Equifax and Moody’s Analytics. Annual growth has only continued, rising further with the pandemic to more than 4,500 net new residents.Sometimes they come for the chance to buy their first home. Other times it’s a bigger house or some land. Joel Sweeney, an academic adviser at Eastern Washington University, wanted the best of both: a single-family house on a quiet street that was close enough to downtown that he could walk to a good brewery. That sort of Goldilocks urbanity could cost a million in Austin, where he and his wife lived until last year. When they moved to Spokane they paid less than a third of that.“You could not get a house for $299,000 in Austin where you could walk to a bunch of different stuff,” he said.Nurses and teachersLindsey Simler, who grew up in Spokane, wants to buy a home in the $300,000 range, but put her search on pause after a dozen failed offers.Rajah Bose for The New York TimesThe white house with the red door sits on a quiet block near Gonzaga University. It has two bedrooms, one bathroom and 1,500 square feet of living space.Mr. Silbar, the real estate agent, has sold it twice in the past three years. The first time, in November 2019, he represented a buyer who offered $168,000 and got it with zero drama. This year it went back on the market, and Mr. Silbar listed it for $250,000. Fourteen offers and a bidding war later, it closed at $300,000.When Mr. Silbar got into the business, he said, his clients were “nurses and teachers,” and now they’re corporate managers, engineers and other professionals. “What you can afford in Spokane has completely changed,” he said.The typical home in the Spokane area is worth $411,000, according to Zillow. That’s still vastly less expensive than markets like the San Francisco Bay Area ($1.4 million), Los Angeles ($878,000), Seattle ($734,000) and Portland ($550,000). But it’s dizzying (and enraging) to long-term residents.Five years ago, a little over half the homes in the Spokane area sold for less than $200,000, and about 70 percent of its employed population could afford to buy a home, according to a recent report commissioned by the Spokane Association of Realtors. Now fewer than 5 percent of homes — a few dozen a month — sell for less than $200,000, and less than 15 percent of the area’s employed population can afford a home. A recent survey by Redfin, the real estate brokerage, showed that home buyers moving to Spokane in 2021 had a budget 23 percent higher than what locals had.One of Mr. Silbar’s clients, Lindsey Simler, a 38-year-old nurse who grew up in Spokane, wants to buy a home in the $300,000 range but keeps losing out because she doesn’t have enough cash to compete. Spokane isn’t so competitive that it’s awash in all-cash offers, as some higher-priced markets are. But prices have shot up so fast that many homes are appraising for less than their sale price, forcing buyers to put up higher down payments to cover the difference.A dozen failed offers later, Ms. Simler has decided to sit out the market for a while because the constant losing is so demoralizing. If prices don’t calm down, she said, she’s thinking about becoming a travel nurse. With the health care work force so depleted by Covid-19, travel nursing pays much better and, hopefully, will allow her to save more for a down payment.“I’m not at the point where I want to give up on living in Spokane, because I have family here and it feels like home,” she said. “But travel nursing is going to be my next step if I haven’t been able to land a house.” ‘Positive activity’From her seventh-floor office atop the Art Deco City Hall, Ms. Woodward, the mayor, looked out at the Spokane River, where in the warmer months a gondola glides past her window to a park built for the World’s Fair. Spokane hosted the fair in 1974 as a means of revitalizing its blighted downtown, and during the recent interview Ms. Woodward pointed out the window at cranes and construction sites that she calls “positive activity.”Spokane’s job market is among of the strongest in the nation, and the virtuous economic cycle — of people coming for housing, causing businesses to come for people, causing more people to come for jobs — is in full swing. And yet, as in Seattle and California before and increasingly across the nation, the scourge of rising prices, particularly for rent and housing, makes it feel less virtuous than advertised.The recent Realtors report warned of “significant social implications” if the city doesn’t tackle housing. The issues included young families not being able to buy or taking on excessive debt, small businesses not being able to hire, difficulty keeping young college graduates in town.In the dominoes of the housing market, the disappointments of aspiring buyers like Ms. Simler get magnified as they move down to lower-income households. With homes so hard to buy, rents have shot up, and the vacancy rate for apartments is close to zero.All of this has compounded at the lowest end of the market, where the nonprofit Volunteers of America’s Eastern Washington and Northern Idaho affiliate, which runs three shelters and maintains 240 apartments for people who were formerly homeless, said it will lose a quarter of its units in the next fiscal year as more of its funding goes to higher rents.Julie Garcia, right, founder of Jewels Helping Hands in Spokane, at her organization’s warming and food tent for people in need.Rajah Bose for The New York TimesA homeless camp in Spokane, where Mayor Woodward declared a housing emergency last year.Rajah Bose for The New York TimesIn December, as temperatures dropped and shelters filled, advocates and members of the homeless population protested by setting up several dozen tents on the City Hall steps. The encampment was gone two weeks later but has since been reconstructed on a patch of dirt on the other side of town. In the winter cold it smells like ash and soot from the open fires burning to keep people warm.Last year, Ms. Woodward declared a housing emergency, and her administration has put in place initiatives that mirror those of housing-troubled cities on the West Coast. The city has built new shelters, is encouraging developers to repurpose commercial buildings into apartments, is making it easier for residents to build backyard units and is rezoning the city to allow duplexes and other multiunit buildings in single-family neighborhoods.Ms. Woodward pointed to Kendall Yards, one of the developments outside her City Hall window, as an example of what she wanted to see more of. The mixed-density project could be a postcard picture of what economists and planners say is needed to combat the nation’s housing shortage and sprawl. In defiance of the single-family zoning laws that dictate the look of most U.S. neighborhoods, Kendall Yards has houses next to townhomes next to apartments, with retail and office mixed in.People in town seem to love it, but are leery of there being more places like it, especially in their neighborhood.“I think it’s awesome — I have friends there, and we go down there to the farmers’ market and walk around,” said John Schram, a co-chair of the neighborhood council in Spokane’s Comstock neighborhood. “That’s just not my vision of what I want for me. My concern is that I move into a neighborhood because of the way that it was designed when I got there, and when somebody else comes in and wants to change that I’m going to be concerned.”He added: “I have nothing against duplexes and triplexes, just not next to my house.” More

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    Fed Warns Meme Stocks Could Pose Some Risks

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    Stocks that experience major volatility as a result of social media attention — often called meme stocks — have not threatened broader financial stability so far but could open the door to vulnerabilities, the Federal Reserve said in a report on Monday.The Fed’s twice-yearly update on America’s financial system included a special section on the meme stock phenomenon. It attributed the trend, in which attention on Twitter, Reddit and other platforms encourages rapid inflows into or out of buzzy stocks, to new trading technologies including mobile apps and to changing demographics, as younger people enter the retail trading market.“Along with the rise in risk appetite and the growing share of younger retail investors, access to retail equity trading opportunities has expanded over the past decade,” the report said.Social media can pump up interest in stocks, and it can also create an echo chamber, one in which “investors find themselves communicating most frequently with others with similar interests and views, thereby reinforcing their views, even if these views are speculative or biased.”Still, internet-inspired pile-ons do not necessarily create conditions that will spur a broad market crash, the Fed’s report suggested.“To date, the broad financial stability implications of changes in retail equity investor characteristics and behaviors have been limited,” the Fed said. The central bank specifically assessed what happened to shares of AMC Entertainment and GameStop in January, noting that activity and volatility in those stocks came alongside high activity on Twitter.While the report concluded that “recent episodes of meme stock volatility did not leave a lasting imprint on broader markets,” the Fed said a few trends “should be monitored.”The report pointed out that young and debt-laden investors may be more vulnerable to stock price swings, especially since they are now using “options,” which allow traders to place bets on whether prices will rise or fall and which can magnify leverage and potential losses.The Fed also warned that “episodes of heightened risk appetite may continue to evolve with the interaction between social media and retail investors and may be difficult to predict,” and that financial firms may not have calibrated their risk-management systems to reflect the volatility and losses that meme stock episodes might trigger.“More frequent episodes of higher volatility may require further steps to ensure the resilience of the financial system,” it said.Looking across a broader range of asset classes and recent trading activity, the Fed’s financial stability analysis generally suggested that the vulnerabilities have moderated compared with earlier in the pandemic — but it did flag high asset prices and a number of lingering risks.Stock prices have increased “notably,” the report said, and prices relative to forecast earnings remain near historical highs. Home prices have climbed, it noted, though mortgage lending standards have not deteriorated too badly. When lenders start to lower their standards, that can make the market more vulnerable.The Fed noted that “corporate bond issuance remained robust, supported by low interest rates,” also pointing out that “across the ratings spectrum, the composition of newly issued corporate bonds has become riskier.”And while many markets show signs of investor optimism, some financial strains from the pandemic shock persist.Some commercial real estate sectors continue to face challenges because “office vacancies are elevated and hotel occupancy rates remain depressed,” the report noted. Plus, “structural vulnerabilities persist in some types of money market funds,” which could amplify a future shock to the system.Money market mutual funds melted down during the pandemic and required a Fed rescue for the second time in a dozen years, and regulators are now looking at how to make them more resilient.The report also warned that life insurers might struggle to raise cash in a pinch.And it delved into climate risks. The central bank is among regulators now trying to understand what risks climate change might pose to banks, insurers and the broader financial system.“The Federal Reserve is developing a program of climate-related scenario analysis,” the report noted. “The Federal Reserve considers an effective scenario analysis program, which is designed to be forward looking over a period of years or decades, to be separate from its existing regulatory stress-testing regime.” More

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    Why Co-Working Spaces Are Betting on the Suburbs

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    Start-ups are betting that the pandemic has spawned a new kind of worker who wants an office space closer to home, without the long commute.Paul Doran, a health care salesman, dreads the thought of commuting back to his office in Manhattan after 19 months of working from home in Jersey City, N.J.But Mr. Doran, 33, also wants a break from overhearing his fiancée’s calls and a better place to meet with clients than the local Starbucks. So he signed up for Daybase, a new company that is opening several co-working spaces, including in Hoboken, close to his apartment.“It would take a couple more zeros on the paycheck,” he said, “to get me back to commuting into Manhattan four or five days a week.”More than a year and a half ago, the coronavirus pandemic triggered an unprecedented disruption to the daily routines of office work, keeping millions of employees in their homes.Now, as the pandemic crawls into a second year, the future of work is still up in the air as many companies have embraced a hybrid model, allowing employees to split their workweek between the office and home, with little clarity about the timing of a mandatory return.In this uncertainty, a growing number of start-ups are betting that the pandemic has spawned a new kind of worker — one who will not be commuting into a central business district five days a week, but would still desire occasional office space closer to home for a distraction-free environment.In the New York City metropolitan area, home to the country’s largest office districts, co-working spaces are increasingly targeting the hundreds of thousands of office workers who live in the suburbs.Some developers who own Manhattan office buildings have scoffed at the idea that satellite workplaces will become a permanent alternative to working from home or from traditional offices, believing the hybrid model is a short-term trend.Still, the emergence of co-working spaces in residential neighborhoods underscores the uncertain prospects for New York’s office sector and its role as an economic engine that supports a vast ecosystem of restaurants, coffee shops and other businesses.The owner of Saks Fifth Avenue is partnering with WeWork to turn parts of department stores into co-working spaces. Codi, a start-up founded in Berkeley, Calif., offers private homes as flexible working spaces. Industrious, a co-working company, has an office space inside a mall in Short Hills, N.J.Daybase, created during the pandemic by a group of former WeWork executives, is opening its first co-working locations in the coming months in the New York City area — Hoboken and Westfield, N.J., as well as in Harrison, N.Y.The company is leasing vacant retail spaces, targeting densely populated neighborhoods where local residents had long prepandemic commutes and few other co-working options. Users can pay $50 for a monthly membership for access to lounge areas or, for instance, use a desk for about $10 an hour.At the heart of Daybase’s thesis is the idea that giving employees the flexibility to work from a suburban office space will ultimately attract a wider talent pool and make New York City more competitive with other cities. The ripple effects would boost the region’s economy, Daybase executives believe, part of an ongoing debate about whether New York City can fully recover only if workers return to Manhattan five days a week.“Certain real estate owners believe the only path to prosperity is to bring everybody back,” said Joel Steinhaus, a Daybase co-founder. “I don’t follow that approach. If we’re thinking about attracting talent to the region, this is more sustainable long-term.”Joel Steinhaus, co-founder of Daybase, is betting on a future in which suburban residents will spend part of their week working out of a co-working space closer to home.James Estrin/The New York TimesIn New York City, the real estate industry has been eager for workers to return to office towers. But many companies have discovered that they can operate with a smaller footprint as more jobs have become fully remote. Despite a recent uptick in demand for Manhattan office leases, the availability of office space there is still near a record high.A recent analysis by Fitch Ratings concluded that if companies were to adopt just a day and a half of remote work per week, office landlords’ profits would fall by 15 percent. At three days, income would be slashed by 30 percent.Jim Whelan, the president of the Real Estate Board of New York, a lobbying organization that represents major developers, said his staff has been required to work five days a week in the office since the summer. He believes buildings will fill up as cheaper commercial rents entice companies to lease in Manhattan again.He questioned why employees would use a co-working site on their work-from-home days and brushed off the possibility of employees working remotely part of the week after the pandemic, calling it “your alternate universe.”“Over time, we are going to work a five-day-a-week schedule,” Mr. Whelan said. “There are signs that the commercial market is picking up in the pace of leasing and in terms of how many tenants are out there looking for space.”In the New York region, about 32 percent of workers were in the office in mid-October, according to Kastle Systems, a security company that tracks employee card swipes in office buildings. The percentage has climbed steadily since Labor Day, but is still half of what employers had predicted in a June survey by Partnership for New York City, a business advocacy group.A bigger reckoning around office space may unfold in the coming years, as an estimated 30 percent of leases at large Manhattan buildings will expire by 2024, according to the New York State Comptroller’s Office. One major question, economists say, is whether larger companies will hold onto their office space to guarantee seats for all employees, no matter how many days a week they come in.New York City’s office buildings are worth an estimated $172 billion and provide about 20 percent of the city’s property tax revenues. As new leasing plummeted during the pandemic, the value of the buildings dropped by $28.6 billion, the first decline in at least 20 years, according to the New York State Comptroller’s Office, costing the city more than $850 million in property taxes.For many employees, the reluctance to return comes down to the commute.Workers in the New York region had the longest average one-way commute in the country at about 38 minutes, according to 2019 census data. About 23 percent of workers in the region commuted at least an hour each way.In June, Tom Hebner, a vice president at NeuraFlash, a consulting firm, relocated to a co-working space operated by Serendipity Labs in Ridgewood, N.J., where he lives. He said he was reminded of the benefits whenever he visits the company’s New York City office, a round trip that can take up to three hours.“I’m the only guy in the suburbs who can walk to work,” said Mr. Hebner, who works at the Ridgewood location every day with three other NeuraFlash employees.John Arenas, the chief executive of Serendipity Labs, said that when he founded the company a decade ago, his pitch for co-working spaces in the suburbs failed to take off because the corporate world strictly adhered to a five-day workweek in a central office.Since the pandemic hit, Mr. Arenas said, more than half of his revenue now comes from companies that pay for employees to work from a co-working location in the suburbs as a perk.Savills, a real estate firm, has found through surveys of its corporate clients that many employees relocated to the suburbs during the pandemic, prompting companies to seek out Manhattan office spaces near transit hubs, like Pennsylvania Station. But it has also led employees to demand more flexibility to work from home.Offering co-working spaces as a perk could risk creating a fractured work culture where employees feel disconnected from the main office and more willing to switch jobs, said Rebecca Humphrey, an executive vice president at Savills.“If you’re not a company that has a very strong sense of your culture, an approach like this can really fail,” Ms. Humphrey said.Co-working spaces in the suburbs are particularly appealing to parents who want more separation between home and work, Daybase said. In its surveys of prospective customers, the biggest complaints about working from home were the lack of space, unreliable internet and noise (leaf blower day, in particular).Daybase plans to expand nationally through franchising, seeking out spaces that are close to grocery stores, child care options and gyms, with the hopes that workers use the offices as part of a broader daily routine.Mr. Steinhaus, the Daybase co-founder, sees the company as a supplement, not a threat, to the traditional office building. In fact, Daybase itself started leasing office space this summer in a tower near Grand Central Terminal. The company organizes its meetings and happy hours around Wednesdays, the designated day when every employee comes into the office.“The office building is not going anywhere,” Mr. Steinhaus said. “We’re just going to use it differently.” More

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    Kaplan and Rosengren, Fed Presidents Under Fire for Trades, Will Step Down

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    Robert S. Kaplan will exit his role as head of the Federal Reserve Bank of Dallas next month. Eric S. Rosengren, the head of the Federal Reserve Bank of Boston, is also retiring earlier than planned.Eric S. RosengrenSteven Senne/Associated PressRobert S. KaplanAnn Saphir/ReutersTwo Federal Reserve officials embroiled in controversy for trading securities that could have benefited from the central bank’s 2020 intervention in financial markets announced on Monday that they would leave their positions.Robert S. Kaplan, who heads the Federal Reserve Bank of Dallas, will retire on Oct. 8, according to a statement released Monday afternoon. Mr. Kaplan’s statement acknowledged the controversy as the reason for his departure. Eric S. Rosengren, the president of the Boston Fed, will retire this Thursday, accelerating his planned retirement by nine months. Mr. Rosengren cited health reasons for his early departure.The resignations followed the Fed’s announcement this month that Chair Jerome H. Powell had ordered a review of the central bank’s ethics rules in light of the concern surrounding the trades. When asked about his confidence in Mr. Kaplan and Mr. Rosengren during a news conference last week, Mr. Powell expressed displeasure with what had happened.“No one on the F.O.M.C. is happy to be in this situation, to be having these questions raised,” Mr. Powell said, referring to the policy-setting Federal Open Market Committee. He added, “This is an important moment for the Fed and I’m determined that we will rise to the moment.”Mr. Kaplan noted in his statement that it was his decision to leave the Fed, and that “the recent focus on my financial disclosure risks becoming a distraction” to the central bank’s economic work.Mr. Kaplan drew scrutiny for buying and selling millions of dollars in individual stocks, among other investments, last year — trading first reported on by The Wall Street Journal on Sept. 7. He has maintained that his trades were consistent with Fed ethics rules.Mr. Rosengren announced on Monday morning that he was retiring earlier than planned to try to prevent a kidney condition from worsening, in the hopes of staving off dialysis. The Boston Fed president came under criticism because he held stakes in real estate investment trusts, which invest in and sometimes manage properties, and listed purchases and sales in those in 2020. He spent last year warning publicly about risks in the commercial real estate market, and was helping to set Fed policy on mortgage-backed security purchases, which can help the housing market by improving financing conditions.Both presidents had previously announced that they would convert their financial holdings into broad-based indexes and cash by Sept. 30.Mr. Powell offered statements of support for both of the retiring officials in the news releases announcing their exit.But the controversy has pushed him into a delicate position. His own term as Fed chair expires early next year, and the White House is actively considering whether to reappoint him. A scandal at his central bank is sure to draw questions from senators when he testifies this week, and could even hurt his reappointment chances.As chair, Mr. Powell has also focused on shoring up public support in the central bank and explaining its role. He holds frequent news conferences, aims to speak in simpler language, and championed a series of “Fed Listens” events where top central bank officials meet and hear from community members whom they might not otherwise interact with — from community college students to local food pantry staff.The 2020 trading disclosures, which are shaping up to be the most headline-grabbing scandal the central bank has faced in years, risk chipping away at the widespread trust he has been working to build.Responses to Mr. Kaplan and Mr. Rosengren’s trading disclosures have been swift, and scathing. The group Better Markets had been calling for the Fed to fire both presidents if they did not resign. Other progressive groups had called for at least one of them to be ousted, and ethics watchdogs have said that the rules that had enabled their trades needed to be revisited.After the resignation announcements on Monday, Wall Street promptly began to assess what the departures would mean for monetary policy. Both officials have tended to worry about financial stability, and for that reason were likely to favor removing monetary policy support sooner than some of their colleagues — a stance often referred to as being hawkish.“Their exit will take out two of the nine more hawkish Fed officials who saw a 2022 rate hike as of the September F.O.M.C. meeting last week and remove important voices on financial stability issues in particular,” Krishna Guha at Evercore ISI wrote in a note to clients shortly after the announcement.Mr. Rosengren has been president of the Boston Fed since 2007, and his retirement was previously planned for June. The Fed’s 12 regional members rotate in and out of voting seats, and Mr. Rosengren would have had a vote on monetary policy next year. Mr. Kaplan would have voted in 2023.Kenneth C. Montgomery, the Boston Fed’s first vice president, will serve as interim president at that bank. The Boston Fed’s board members — excluding bank representatives — will need to select a permanent pick for president, subject to approval from the Fed’s Board of Governors in Washington.A longtime Fed employee who worked in research and bank supervision before becoming president, Mr. Rosengren played a key role in the 2020 crisis response. His regional Fed ran both the money market mutual fund and Main Street lending backstop programs that the Fed rolled out last year.The Boston Fed noted in the release that Mr. Rosengren hoped that his health condition would improve, and that he would be able to “explore areas of professional interest” in the future.Mr. Kaplan has been at the head of the Dallas Fed since late 2015, before which he taught at Harvard University and had a long career at Goldman Sachs. Meredith Black, that bank’s first vice president who had planned to retire, will serve as interim president until a successor is named, the Dallas Fed said. More

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    Google to Spend $2.1 Billion on Manhattan Office Building

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    The technology giant has built a sprawling campus on the West Side of Manhattan and has 12,000 employees in the city.Google announced on Tuesday that it would spend $2.1 billion to buy a sprawling Manhattan office building on the Hudson River waterfront, paying one of the largest prices in recent years for an office building in the United States and providing a jolt of optimism to a real estate industry lashed by the pandemic.The transaction comes during a precarious period for New York City’s office market, the largest in the country, as the swift embrace of remote work and the shedding of office space have presented the most serious threat to the industry in decades.While Manhattan has a glut of office space available for lease, setting record vacancy levels during the pandemic, the four firms that make up so-called Big Tech — Amazon, Apple, Google and Facebook — have staked a bullish position on the future of New York.The companies have rapidly increased their operations and work force, one of the few bright spots for New York, which has been hit harder by the pandemic’s economic toll than any other major American city.Google was already leasing but not yet occupying the 1.3 million-square-foot property, a former freight terminal near the Holland Tunnel known as St. John’s Terminal that is being renovated and expanded. The company has 12,000 corporate employees in New York City — its largest satellite offices outside its California headquarters — and said on Tuesday that it planned to hire another 2,000 workers in the city in the coming years.“New York’s energy, creativity and world-class talent are what keep us rooted here and why we’re deepening our commitment with plans to purchase St. John’s Terminal,” said Ruth Porat, the chief financial officer at Google and its parent company, Alphabet. “We look forward to continuing to grow along with this remarkable, diverse city.”Collectively, the four tech giants employ more than 22,000 people in their Manhattan offices. But their workers are unlikely to work five days a week in the office again anytime soon. Many tech companies have said they will allow employees to work remotely in a hybrid arrangement even after the pandemic ends. Google recently postponed its return-to-office plans to early 2022 because of the highly contagious Delta variant.The speed with which the economy recovers in New York City, especially Manhattan, could hinge on office buildings. Before the pandemic, they drew a million workers every day, and those workers’ spending on everything from morning coffee to business lunches to after-work Broadway shows supported thousands of businesses. The absence of those commuters has led many stores and restaurants to close in Manhattan.Companies have embraced remote work during the pandemic in ways they never had before, deciding that employees would be able to continue to work from home for some or all of the week after the pandemic eventually ends and even hiring new employees who plan to stay away from the office indefinitely.As a result, large employers like Condé Nast and JPMorgan Chase have relinquished chunks of office space, contributing to nearly 19 percent of Manhattan offices being available for rent, according to Newmark, a real estate services firm, nearly double the average rate over the last decade.About 28 percent of office workers in the New York City region, which includes parts of New Jersey, Connecticut and Pennsylvania, had returned to the office as of last week, more than double the rate from a few months ago, according to Kastle Systems, a security company that tracks employee card swipes in office buildings. The nationwide average was 33.6 percent, Kastle said.Kate Lister, the president of Global Workplace Analytics, a consulting firm advising companies on their return-to-office policies, said that hybrid work would remain a permanent feature of work culture after the pandemic.Office space is not going to disappear, but, Ms. Lister added, “The total space will come down.”Still, elected officials in New York sought to cast Google’s announcement as a sign of the city’s rebound.“This announcement from Google is yet another proof point that New York’s economy is recovering and rebuilding,” Gov. Kathy Hochul, a Democrat, said in a statement. “We are creating jobs, investing in emerging industries, lifting up New Yorkers, and together, we are writing our comeback story.”Mayor Bill de Blasio called the deal “a historic investment in New York City.” The transaction was first reported by The Wall Street Journal.When the St. John’s building opens after construction is finished in mid-2023, Google will have more than 3.1 million square feet of office space in New York, making it one of the largest leaseholders in the city.Google’s New York presence began in 2000 with a single employee in sales who worked out of a Starbucks. The company sealed its commitment to the city in 2010 with the $1.8 billion purchase of a 15-story building in Chelsea.Over the past decade, Google has rapidly increased its work force in Manhattan, hiring young engineers from the region’s universities, attracting tech workers who do not want to live in Silicon Valley and expanding its marketing and sales departments. The company has added 5,000 employees in New York since late 2018.The terminal building that will be home to Google’s new office is in Hudson Square, a neighborhood on the West Side of Manhattan between TriBeCa, Greenwich Village and SoHo. Many creative, media and tech companies have offices there, including the website builder Squarespace and the eyewear company Warby Parker. Disney has also selected the neighborhood as the site of the new headquarters for its New York office.In addition to businesses, the area has a growing residential population, after a rezoning in 2013 led to a boom in the development of new high-rise and condo buildings.In recent years, Google’s main rivals, notably Amazon and Facebook, have also invested heavily in New York City, turning a swath of the West Side, from Midtown to Lower Manhattan, into a thriving tech corridor.Facebook has acquired more than 2.2 million square feet of office space in Manhattan, most of it signed just before or during the pandemic, and has 4,000 employees in the city. Amazon, whose corporate offices are largely clustered near its competitors on the West Side of Manhattan, also bought the former Lord & Taylor building on Fifth Avenue for $1.5 billion in March 2020.And while the tech industry has been among the most amenable to remote work, the companies are still gobbling up real estate, a potential sign of their hiring pace and of a reimagining of office space.Tom Wright, president of the Regional Plan Association, a research and advocacy group, said that even though tech employees may only come into the office a few times a week, they may want more space between desks or bigger conference rooms. In particular, he said, offices need to figure out how to accommodate hybrid meetings in which some participants are in person while others are videoconferencing in from home.“During the pandemic, people assumed an across-the-board reduction in activity and demand for office space when actually it’s a much more complex equation,” Mr. Wright said.The growing footprint of Google and other tech giants in New York reflects their increasing importance to the city’s economy. Economists expect the tech sector to be a primary engine for job growth after the pandemic.In the first eight months of the pandemic, there were more job openings in technology roles than in any other occupation in New York City, according to an analysis of job postings by the Center for an Urban Future, a nonprofit research group. During that period, demand for tech workers was more than double that for finance.The tech sector has become New York City’s most reliable source of new middle- and high-wage jobs, researchers said, with average wages in tech jobs 49 percent higher than the average private-sector wage.But the presence of tech giants in the city has also been a source of tension, most notably in 2019, when Amazon abandoned plans to build a new corporate campus with 25,000 employees in Queens after facing opposition from progressive activists, elected officials and union leaders.They were angered chiefly by billions of dollars in government tax breaks and incentives offered to Amazon as a lure.Less than a year later, Amazon signed a lease for office space in Midtown Manhattan near the Hudson Yards development, the start of a multiyear expansion in New York City.Julie Samuels, the executive director of Tech:NYC, an advocacy group for the tech industry, said that despite the collapse of the Amazon deal in 2019, tech companies are still drawn to New York City because of its concentration of diverse tech talent.“I have not heard of another company either pulling back on plans to be here or deciding not to come here because of Amazon,” Ms. Samuels said. “We were worried about that.” More

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    Retailers Rethink Pandemic-Battered Manhattan

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    Starbucks has closed more than 40 stores, while adding mobile-order pickup counters in others. Other chains like Sonic are taking advantage of vacancies to establish themselves in New York.In the heart of Manhattan’s garment district, a once-busy Starbucks on the corner of Eighth Avenue and 39th Street sits empty. Just down the block, a Dos Toros Taqueria that opened just three years ago is now closed. And Wok to Walk, which once served steaming containers of noodles mixed with chicken and vegetables to a bustling lunch crowd, is also shuttered.While the Delta variant of the coronavirus has again delayed plans by many companies to bring employees back to offices en masse, workers who have been trickling into Midtown are discovering that many of their favorite haunts for a quick cup of coffee and a muffin in the morning or sandwich or salad at lunchtime have disappeared. A number of those that are open are operating at reduced hours or with limited menus.With the pandemic keeping millions of New York City office employees home for the past year, restaurants, coffee shops, apparel retailers and others struggled to stay afloat.By the end of 2020, the number of chain stores in Manhattan — everything from drugstores to clothing retailers to restaurants — had fallen by more than 17 percent from 2019, according to the Center for an Urban Future, a nonprofit research and policy organization.Across Manhattan, the number of available ground-floor stores, normally the domain of busy restaurants and clothing stores, has soared. A quarter of the ground-floor storefronts in Lower Manhattan are available for rent, while about a third are available in Herald Square, according to a report by the real-estate firm Cushman & Wakefield.Starbucks has permanently closed 44 of its 235 locations in Manhattan. It is now adding pickup areas in many stores.Hilary Swift for The New York TimesStarbucks has permanently closed 44 outlets in Manhattan since March of last year. Pret a Manger has reopened only half of the 60 locations it had in New York City before the pandemic. Numerous delicatessens, independent restaurants and smaller local chains have gone dark.“Midtown clearly has been the hardest hit of any of the areas of Manhattan,” said Jeffrey Roseman, a veteran retail real-estate broker with Newmark. “If you think of other office-centric areas, whether all the way downtown or Flatiron or Hudson Yards, there is a lot of residential surrounding those areas that helped sustain those markets. Midtown, for the most part, is a one-trick pony.“It’s mostly offices and hotels, which also took a hit from the downturn in tourism.”The turmoil has reached farther downtown though. Last week, the luxury furniture retailer ABC Carpet & Home — whose flagship store was a fixture of the Union Square area — filed for bankruptcy protection, in part because of “a mass exodus of current and prospective customers leaving the city.”But in a city where one person’s downturn is someone else’s opportunity, some restaurant chains are taking advantage of the record-low retail rents to set up shop or expand their presence in New York City.In the second quarter, food and beverage companies signed 23 new leases in Manhattan, leading apparel retailers, which signed 10 new leases, according to the commercial real estate services firm CBRE.Shake Shack and Popeyes Louisiana Kitchen were among those signing new rental agreements this year. So was the burger chain Sonic, which signed a lease for its first New York City outpost, replacing a Pax Wholesome Foods location in Midtown. The Philippines-based chicken joint Jollibee, which enjoys a committed following, plans to open a massive flagship restaurant in Times Square.Sonic signed a lease for its first New York City outpost, replacing a Pax Wholesome Foods in Midtown.Hilary Swift for The New York TimesStill, with so much uncertainty about when employees may fully return to Midtown offices, some companies are proceeding carefully. The coffee shop Bluestone Lane had plans to expand aggressively into Manhattan before the pandemic and is still considering locations in Midtown. But it has now turned its focus to opening in more residential neighborhoods like Battery Park City, Hudson Yards and Tribeca.“We intentionally selected urban residential areas for our new cafes so we are not dependent on our locals returning to a physical office space, and are well-positioned for the future of hybrid work,” Nick Stone, the founder and chief executive of Bluestone Lane, said in an emailed statement.And some chain restaurants that already have reopened in Midtown are altering their strategies to address what they believe are the changing needs of customers in a post-Covid world.On a recent weekday, a handful of customers were nibbling on salads and sandwiches at the Bryant Park location of Le Pain Quotidien. The long, communal tables that once dominated the front of the restaurant are gone for now, while refrigerated cases for a selection of grab-and-go drinks, salads and sandwiches will be expanded next year as part of a remodeling. A new app to preorder and pick up food became available in May.While the new technologies work for some customers, others long for the past.A Europa Cafe in Times Square closed, one of numerous stores to shutter during the pandemic.Hilary Swift for The New York Times“We used QR codes for guests to look at the menu as we tried to limit the contact of surfaces, but the majority of our guests want to hold a real menu,” said Stephen Smittle, the senior vice president of operations for Le Pain Quotidien. “They very much want to feel normal. They want a server. They want to hold a cup of coffee, not a paper cup.”Struggling before the pandemic, Le Pain Quotidien filed for bankruptcy in May 2020. It was acquired by Aurify Brands, which has since reopened many of the Le Pain Quotidien locations around the city, including several in Midtown.“Our thinking is that Midtown New York will come back to a level that might not be 100 percent prepandemic, but based upon information we have gathered, I do believe that Midtown is going to come back to a prominent level,” Mr. Smittle said.An online-order status board at Starbucks.Hilary Swift for The New York TimesCustomers increasingly like ordering drinks online and then picking up at the store.Hilary Swift for The New York TimesFor Starbucks, one of the big lessons from the pandemic was that customers liked ordering their drinks online and then quickly picking them up at stores or drive-throughs. Starbucks had started to offer that even before the pandemic, opening a pickup location in Midtown’s Pennsylvania Plaza in late 2019.Since early 2020, Starbucks has permanently closed 44 of its 235 locations in Manhattan. But it is in the process of adding mobile pickup areas in many stores and adding more pickup-only locations. The company says that it expects to have net new store growth in Manhattan in the next few years.Before the pandemic, Starbucks operated three stores around the Columbus Circle area. It closed them and this year, opened one large restaurant. Now runners from Central Park pick up their preordered drinks from a mobile counter and head out again, while other customers stand in line to place their orders and can sit at nearby tables.“We were going to build the concept out and evolve over time,” said John Culver, the president of North America and chief operating officer for Starbucks. “What we’ve done is taken the opportunity that the pandemic has presented and accelerated the transformation of our portfolio of stores. Consumer behaviors during the pandemic have accelerated at levels that no one expected.” More