
How Manhattan Became a Rich Ghost Town - ninkendo
https://www.theatlantic.com/ideas/archive/2018/10/new-york-retail-vacancy/572911/?single_page=true
======
ardit33
I live in manhattan and I feel this story is a bit exaggerated, or at least I
don't see the author's reality. (Him quoting a Real Estate firm, which is
interested in activity, doesn't give credence to the data).

The turnaround of restaurants and bars here is amazingly fast. When one fails,
another one springs up. The same street will have very different storefronts
each year. I once asked a restaurant owner, on how is this possible. He told
me: Rent is expensive, and if you open a restaurant that is not doing well
(attracting the clientele to afford staying afloat), is it much better to shut
it down otherwise it becomes a huge money pit. What often happens is this: One
person signs a long term lease for some kind of business (retail, food,
whatever). The business is not doing well, he decided to shut it down and sub-
lease the space. (this is easier when the market rates have risen). The second
guy does give a try to his dream bar/restaurant/retail. If it doesn't work, he
is forced to shut it down as well, rinse and repeat until you have a business
that has the right winning formula and sticks around. This is 'creative
destruction' on steroids.

What I have seen in manhattan since I moved here in 2013: More hipster style
coffee shops. More pizza places. Less "cheap" retail, and more luxury good
stores.

So, he is right, that cheap retail is generally pushed out because of the
amazon effect, but in the other hand things like "thrift / second hand
clothes" stores, are doing well.

What is replacing those 'cheap' stores is generally things in the food
business: Cupcake stores, Ice Scream Parlors, Yogurt bars, and yes nail
saloons as well.

But my success story (at least for my part), are coffee places. Birch Coffee,
Tobby's Estate, Greggory's Coffee, etc.... all started in NYC, and they are
striving and opening in countless locations.

~~~
blindwatchmaker
> The turnaround of restaurants and bars here is amazingly fast. When one
> fails, another one springs up. The same street will have very different
> storefronts each year.

Is that supposed to be a positive thing? Sounds pretty unstable and a terrible
detriment to developing an actual neighbourhood.

~~~
addicted
Not generally. The good stuff will stick around. The stuff that isn’t as good
wont.

Most cities are about change, and while nostalgia is great, cities that look
the same as they did 20 years previously usually are not successful cities.

The reason is simple. Cities tend to attract younger folks. As the generation
of people they attract changes, the tastes they need to cater to also changes.

~~~
bpicolo
> The stuff that isn’t as good wont

Tons of good stuff closes in Manhattan.

~~~
malandrew
San Francisco too. Three of my favorite restaurants closed in the last year.

------
sarabande
It seems to me like in big cities, as this article describes what eventually
will happen is the rich will buy up the property because nobody else can
afford it, service workers won't be able to actually live within a reasonable
distance in order to work there, and the city will exist mainly for 1) wealthy
professionals, 2) people who use real estate to park their money, and 3)
tourists. Regular working-class folk disappear.

When one visits the city in the daytime, it seems like it has activity because
of the tourists, but it has no real indigenous activity.

Perhaps that's the steady state, because there are enough tourists to keep the
city going economically.

~~~
wgerard
Anecdotally, that doesn't really seem to be the problem with New York and
definitely not the problem the article is talking about.

Ground-level stores don't seem to be suffering from staffing issues, largely
because in New York it's not uncommon to work in Manhattan but live in Staten
Island or Jersey.

Instead, ground-level stores seem to be disappearing because commercial lease
agreements are just insanely expensive and onerous. Landlords refuse to reduce
rents (for several purported reasons) in an increasingly buyer-friendly real
estate market.

~~~
Wowfunhappy
And, this feels like an issue that will naturally fix itself over time, as
landlords realize what they're asking for isn't reasonable.

~~~
neuromantik8086
> And, this feels like an issue that will naturally fix itself over time, as
> landlords realize what they're asking for isn't reasonable.

Except it won't, exactly because landlords are rational actors. Let's say the
upkeep for a space is $400/mo, and the rental for that same space is 3000/mo.
A storefront could be vacant for 2 years and a landlord would still turn a
hefty profit if they were able to get someone to sign a one-year lease after
the 2 years of vacancy.

NYC is a big place- for every 30000 people that think that the rent is
unreasonable, there's 1 person who thinks that it is, and landlords only need
that 1 person. Renters have no leverage here.

~~~
naravara
This is why property and land taxes are good. Land is, as they say, the only
thing they're not making any more of. If you're owning it and not putting it
towards any productive use you ought to pay back into the commons for the lost
utility.

~~~
kenmicklas
In this case property tax (the non-land component of it) only exacerbates the
problem though.

------
samstave
If you want to see a ghost town - Tahoe City Ca is decimated by AirBnB+Money.

I grew up there, and I was there last weekend for my Dad's memorial
service.... I hadnt been back to Tahoe City for some time - and man, its
freaking depressingly bad.

The "mall" \-- the Boat Works, has basically 4 shops any longer, the retail
spaces near Tahoe City Golf is boarded up and has weeds - many retail spaces
are empty, the freaking BANK had to close, restaurants arent doing well
according to several people I know who have worked in them for ~35 years (at
SunnySide, for example)....

and all my Dad's freinds/contemporaries blame SV Money + AirBnB -- in that
there are no places for anyone to live. Houses arent being rented to people
who would want to live there - both seasonally or long-term.

All the cheaper houses were bought up over the last decades and rebuilt with
$1MM++ homes in their place (This happened to one area which was the "ghetto"
in the 80s when I was a kid - where all the houses were replaced with >$1MM
homes and became one of the most expensive zipcodes in the country - whereas
it was where all the "poor" kids lived in the 80s)

~~~
naravara
I think a lot of economic models severely underrate the extent to which
overheated real-estate markets eat economic vitality alive. It's because most
of the costs they impose (initially) aren't that easy to quantify, but you're
basically grinding your seed corn by making it impossible for working people
to be able to afford to live and making it impossible for small businesses
that aren't bars or restaurants to have a viable business model. Where's your
next generation of innovation going to come from when you've done that? What
happens to the community that lives in a place when the people with all the
land and political power have no stake in the community itself?

------
March_f6
I lived in NYC from 2009 to 2017 and can affirm the author's feeling. Over the
span of those years, and mostly as of late, I saw many of my favorite brick
and mortars (Rare books, sporting goods shops, record stores, etc.) all be
replaced by coffee shops or juice places.

Granted each of the above mentioned places have challenges with their
respective industry but the feeling still stands.

Having been born in North Texas, I can also affirm the changing topography of
America due to traditional brick and mortars being ousted. My hometown was
once called the "Little Austin". It's now overrun with mini-mall strips that
hold duplicates of things set up on the other side of town. (How many mattress
stores and Sonics does a town of 100,000 need?)

The recent bankruptcy of Sears is another example where we will likely see
large buildings across the country left empty and whose re-purposing will be
contingent on state/city zoning laws (Texas doesn't have any) and rent. That
is, why should I pay to reuse Sears's old building when the state/city will
let me build a brand new building right down the highway?

~~~
altoidaltoid
"How many mattress stores and Sonics does a town of 100,000 need?"

[http://freakonomics.com/podcast/mattress-store-
bubble/](http://freakonomics.com/podcast/mattress-store-bubble/)

~~~
abakker
[https://www.wsj.com/articles/mattress-firm-files-for-
chapter...](https://www.wsj.com/articles/mattress-firm-files-for-
chapter-11-bankruptcy-1538745006)

Short answer: fewer.

------
megaman8
It's not just Amazon. The next generation is far less materialistic than
generations of the past. No one can blame them for not wanting to spend 500$
on a Gucci gucci bag or 400$ on overpriced jeans, especially when they've got
all that student debt. Workplace clothes are changing as well. Less people are
opting for the fancy suits. Retail needs to keep up with the changes and start
offering something people actually want, like: coffee bars, museums,
libraries, book exchanges, 2nd hand stores, places that offer experiences
(like sculpting classes, etc). Or here's a crazy idea: let's actually start
using some of the 2nd floor+ space for housing/residential and maybe the place
won't be such a ghost town when more people can afford to live there.

~~~
wgerard
> The next generation is far less materialistic than generations of the past.

Ehhhh, I dunno that I'd go that far. It's just different shit. I think we all
know plenty of people lined up the second a new iPhone or Pixel is announced.

~~~
naravara
Materialism probably isn't the word, but conspicuous consumption of consumer
goods (say that 5 times fast) is definitely less of a thing among the urban
set than it used to be in the 80s and 90s. I wouldn't categorize smartphones
as conspicuous consumption per se, because even when blinged out in gold they
still tend to be pretty understated in comparison the the dinner-plate sized
Breitlings that finance bros used to wear.

The culture at one point used to be REALLY insistent on showing off that you
drink only the finest wines, eat the fanciest steaks, and so on. Trump is
basically like, a distilled down and exaggerated throwback to this sort of
tendency to buy stuff more to announce "I'M RICH BITCH!" than to actually
enjoy the thing itself.

Insofar as millennials are still materialistic, I'd categorize it more as
conspicuous consumption of "experiences." So rather than buying fancy things
to announce how rich you are, you just post instagram pics of yourself in
fancy places. If not for the carbon emissions from jet fuel, it would probably
be a way more environmentally friendly way of being a status-whore all things
considered.

~~~
wgerard
> I wouldn't categorize smartphones as conspicuous consumption per se, because
> even when blinged out in gold they still tend to be pretty understated in
> comparison the the dinner-plate sized Breitlings that finance bros used to
> wear.

Trust me, "finance bros" still have plenty of insanely expensive items that
are largely meant as signals to the people they work with (other people in
finance).

Further, just because it's more understated doesn't mean it's not primarily
meant as a status symbol or signal to other people. Remember when the rose
gold iPhone was more expensive than the other colors, and it sold out
immediately?

> So rather than buying fancy things to announce how rich you are, you just
> post instagram pics of yourself in fancy places.

Is that really better? Maybe it's not materialism in the strictest sense of
the word, but the underlying desire (to signal status to others) is the same.
The only thing that's changed is the artifact of that desire.

------
whack
Let's recap the author's main points:

\- Retail revenues are not rising as fast as rent

\- Hence, shopping/merchandise stores are being replaced by
bars/restaurants/coffee-shops etc

Ie, businesses that sell stuff are being replaced by businesses that sell
experiences.

Great!

Consumerism and materialism is a black hole for your soul. What I really care
about are vibrant experiences. Interesting bars/restaurants where my friends
and I can hang out. Great live theater where I can watch the arts. And yes,
even stimulating coffee shops where I can spend the day reading and writing.

Want to go shopping for goods? Go online where you can shop to your heart's
content. I'm glad the city's valuable real estate is being taken over by
businesses that are more focused on human interactions.

For the record, I've lived in Manhattan for many years in recent times, and it
has never once felt like a ghost town. I've heard many complaints about the
city, but I've literally never heard anyone else complain about it feeling
like a ghost town, or anything even similar. Living in suburbia though...

~~~
malvosenior
Paying for experiences like this is still consumerism.

~~~
whack
On a technical level: depends on how you're defining consumerism. See:

[https://www.merriam-webster.com/dictionary/consumerism](https://www.merriam-
webster.com/dictionary/consumerism)

[https://www.investopedia.com/terms/c/consumer-
goods.asp](https://www.investopedia.com/terms/c/consumer-goods.asp)

At a deeper level: research has shown that spending money on experiences
enriches your life far more than spending money on "things". That's what I'm
referring to.

[https://www.bloomberg.com/news/features/2017-02-28/why-
you-s...](https://www.bloomberg.com/news/features/2017-02-28/why-you-should-
buy-experiences-not-things)

~~~
kbob
"Consume" literally means "eat". So eating out is definitely consumerism.

~~~
whack
By your definition, I guess any caveman who didn't go on a hunger strike, was
living up the consumerist lifestyle

------
jotjotzzz
I've lived and grew up in NYC for almost 30 years and I agree with the author.

Manhattan has become an unaffordable ghost town. Walk down West Village, Union
Sq, Flatiron, etc.., you see rows of closed stores that have gone vacant for a
very long time now. In contrast, I was in London recently and that city was
thriving compared to Manhattan, it was lively and beautiful.

In addition, NYC Subway and transportation is a disgrace. It is on its way to
becoming a third-world country equivalent. This was due to mismanagement and
corruption. You won't notice how Manhattan has deteriorated until you leave
the U.S. and visit other cities in Europe and especially Asia. Even Thailand's
subway system is a hell of a lot better than the NYC subway.

~~~
ascagnel_
The thing I find craziest about Union Square is the number of drugstores. Just
along the south end of the square, you've got Walgreen's (a national brand)
and Duane Reade (which used to be independent, but is now a local brand for
Walgreen's) 600ft. or so apart from each other. How in any way is that
sustainable?

~~~
dbattaglia
Across the street from my apartment on 14th and 1st there is a Duane Reade and
CVS literally attached to each other. It’s pretty crazy. The CVS is old and
grungy, Duane Reade newer and larger (3 floors). I suspect those differences,
plus possibly prople’s dependence on a certain pharmacy brand (thanks to their
health insurance) is what allows them both to stay open.

------
namdnay
Here's my opinion on what will happen on a longer time scale:

Eventually the tourists will stop coming, because there are other parts of
town with more atmosphere. Businesses will start moving out to other parts of
town because of the cost of rent and lack of customers (due to no residents or
tourists), and eventually the "city center" will defacto move. The only people
who will lose out are the people who used it to park their money!

~~~
chasing
I think this is sort of happening in NYC: The center of gravity is sort of
moving to Brooklyn since it's cheaper, there's more space, it's more
interesting, etc. And depending where you are, Manhattan is still very
accessible.

Obviously the key NYC tourist targets aren't moving, but anecdotally I am
seeing an uptick of tourists in my 'hood. For what it's worth.

~~~
swarnie_
I haven't been in Brooklyn for getting on 10 years. Can you elaborate on what
popular tourist friendly areas are now about? (I'm in NYC in March '19)

~~~
ddoran
Sign up for the New York Road Runners NYC Half (March 17th - St Patricks Day!)
As of 2018 the new course starts in Grand Army Plaza Brooklyn, down Flatbush
Avenue and run across the (closed to traffic) Manhattan Bridge, along the FDR,
through Times Square and finish in Central Park (lottery and charity only
though).

Spend a half day around Brooklyn Bridge Park, Dumbo and the Brooklyn Heights
Promenade - especially the latter given the area is about to go through a
major upheaval as the BQE cantilevered section is due to go through some major
renovations lasting 6+ years.

A half day in Brooklyn Museum, Brooklyn, Botanical Gardens, Prospect Park.

Checkout the breweries and coffee shops of Gowanus and Carroll Gardens.

Do the Made in Red Hook tour and check out some really interesting local
makers. [1]

Visit one of the oldest buildings in the city [2]

Take a Brooklyn Pizza / Chocolate / Neighborhood tour [3]

[1] [http://www.madeinbrooklyntours.com](http://www.madeinbrooklyntours.com)
[2] [https://wyckoffmuseum.org](https://wyckoffmuseum.org) [3]
[https://www.asliceofbrooklyn.com/](https://www.asliceofbrooklyn.com/)

~~~
swarnie_
Thank you very very much for the detailed reply, i'll do my best to see a few
of these spots during my visit =))

------
ilamont
In Boston, there was a debate recently about 50 empty ground-level retail
spaces on Newbury Street, an old street in the center of town long considered
a place for luxury boutiques/salons/etc. But others questioned the data:

[https://www.universalhub.com/2018/lot-empty-storefronts-
newb...](https://www.universalhub.com/2018/lot-empty-storefronts-newbury-
street)

~~~
achileas
I live in that neighborhood, and as the article says it looked like it was
mostly a ton of turnover. There's a lot of it on Newbury, which is a problem
in its own right, and the places that remain are largely regional and national
chains. The costs are also driving people to move to other neighborhood and
towns, with Eastie, Somerville, and Southie growing much more than the
traditionally desirable neighborhoods in Boston.

Anecdotally, the company my wife works for has a presence on Newbury, they're
a large national chain, and the store (a flagship) has one of the lower sales
volumes in the entire region, despite being one of the most expensive rents
the company holds. The problem is manifold here - rising business rents
pushing businesses out, rising residential rents pushing people that aren't
tourists out, and likely more that I'm less familiar with.

------
tyu1000
I had read a bunch of these stories before going to NYC as a tourist a few
weeks ago. I didn't see a single block that was full of empty storefronts and
the whole city was packed and vibrant as usual. Bought some clothes at
temporary popups as well.

------
empath75
I think it’s more of a result of absentee landlords building a real estate
portfolio that they don’t really give a fuck about as building managers.
They’re flipping these buildings just like houses were being flipped before
the financial crisis. Having renters in there just complicates things.

There’s a metro stop out here in northern Virginia that has a beautiful office
building on top of it designed by a top architect and it’s _empty_. For at
least a year now. And they’re building two more office buildings in the same
location. They’re probably just all going to end up being managed by WeWork.

The whole thing reeks of a bubble to me.

------
roenxi
Is there some legal issue at play here that the article isn't drawing
attention to? Why is it a better idea to leave a property vacant than to have
a short-term tenant?

~~~
Itaxpica
Landlords can take tax write-offs for empty properties, so they’re
incentivized to sit on empty storefronts until the perfect long-term lease
comes along rather than rent to a less ideal shorter-term tenant.

~~~
djrogers
A tax write off is going to be worth, at best, ~35% of the value gained from
actually leasing the property. That makes it considerably worse to hold on to.

~~~
polygotdomain
Its far more complicated than that. Most of the owners of these properties are
institutional, not individuals or small groups. They are far more concerned
about the valuation of the real estate than it's cash flow. The cashflow side
has issues too, but from a valuation perspective, once you sign a rent at a
lower rate, then that will trigger a shift from the inflated, unrealized rent
in the valuation model, to the actual rent in the lease. It's entirely likely
that the dip in value from the signed lease is more impactful than the actual
cashflow from that lease. It doesn't matter that you couldn't get the rent in
the model today, since pushing out the assumption results in less of a hit in
value than signing an actual lease would. This all gets billed as "the market
will bounce back".

Remember there are a lot of upfront costs for the land lord as well. They put
in a lot of money upfront for buildouts/base building work, and it may be 2-3
years before they actually break even on the money they put into the space. If
you're not sure that the business model is going to last that long then it
absolutely makes sense to sit on the vacancy.

Source: worked at a nationally invested REIT that had a good number of
properties that have this same issue.

------
village-idiot
I actually think that we no longer live in a capitalistic system. A lot of
firms continue to behave in ways that capitalism should punish, but doesn’t.
My current running theory is that our economy is more based around rent
extraction, largely from land and companies that wield effective monopolies or
oligopolies, rather than competition. This explains why we keep seeing things
that make no sense from a capitalist point of view.

~~~
pavlov
Sounds like you're discovering Marx independently?

~~~
village-idiot
Probably. I’ve only read parts of Capital, it’s too dense for me to make good
headway on.

I’m also heavily informed by the Anarchist Sociologist David Graeber’s book of
“Bullshit Jobs, a Theory”. He points out that a significant percentage of
jobs—he estimated 40%—don’t even serve an economic purpose, let alone a moral
or social one. This is something that capitalism in theory should not allow,
which is why I think we’re trending to somewhere else.

~~~
olivermarks
Recommend reading Bakunin if you are interested in 'anarchist socialism'
[https://en.wikipedia.org/wiki/Mikhail_Bakunin](https://en.wikipedia.org/wiki/Mikhail_Bakunin)
Marx was a pied piper to nowhere IMO and in league with the oligarchs and
bankers of his era

------
sbussard
Gentrification of the wealthy?

------
pontifier
Paying rent is for suckers.

~~~
effingwewt
Or, you know, for people who can't afford to buy.

~~~
pontifier
If you can't afford to buy, then you doubly can't afford to rent. Money spent
on rent is essentially burned. Do everything you can to avoid it.

------
davidf18
I live in Manhattan and the cost of rents and housing has been increasing
primarily through rent-seeking behavior which limits housing density creating
an artificial scarcity in land leading to a high cost of living. Simply fixing
the zoning density restrictions would reduce the rent-seeking or "market
failure" and would lower the cost of living in NYC. See Harvard Economist
Edward Glaeser's work for more details.

Build Big, Bill [http://www.nydailynews.com/opinion/build-big-bill-
article-1....](http://www.nydailynews.com/opinion/build-big-bill-
article-1.1913739)

There is a NY State mandated minimum wage law that has been hurting many
stores and has increased the cost of food in grocery stores, for instance.

It was mandated to $11 / hr to $13 (today, I think) to $15.

Thus, the real issue is the market failures in housing caused by politicians
who limit the zoning density. The State, addressing the high cost of housing
not by fixing the rent-seeking instead decided to increase minimum wage to a
level that many independent establishments can no longer afford to stay in
business.

------
qubax
It became a ghost town because of the elites and their supporters like
theatlantic.

Manhattan now is just a place where people from the outer boroughs, nj,
connecticut, etc come to work and then go home.

For a city that pretends to "never sleep", it is just a dead city at night.

Queens, brooklyn, etc is more lively and other cities around the world like
prague, barcelona, seoul, tokyo, osaka, etc are far more vibrant.

Manhattan is just a hellhole now for the world's wealthy and annoying tourists
who are too stupid to realize that sbarro's isn't real ny pizza and all the
worthless trinkets they buy are trash. But at least there is a bank every
other corner.

The sad part is manhattan is a blueprint other cities love to copy so in 10 or
20 years, most cities around the world will be boring tourist traps like
manhattan.

~~~
olivermarks
We are seeing the same pressures and bland out in San Francisco

~~~
seppin
lol SF never had 1/10 the vibrancy NY had, or has.

~~~
olivermarks
True. Very different culture and not a late night city...

