New York City’s economic recovery was hit hard this past week as real estate sales declined and COVID-19 hospitalizations increased. Gov. Andrew Cuomo imposed a 10 p.m. curfew on bars, restaurants, and gyms, and limited private home gatherings to 10 people in response to the uptick in coronavirus cases.
One bright spot in the challenging week came from the jobs market as weekly initial unemployment claims fell yet again, continuing an 8-week trend of declining layoffs. Still, New York City’s recovery stands at just 49.8 out of a total score of 100, according to the New York City Recovery Index, a joint project between Investopedia and NY1. The index fell 2.7 points from the prior week.
COVID-19 Hospitalizations Increase
There was a significant increase in COVID-19 hospitalizations for the week of Nov. 7 with an average of 55 hospitalizations per day, up from 44 average daily hospitalizations the prior week. This reflects a recent uptick in new cases, with New York City reporting 287,000 total cases as of Nov. 15. Recent spikes triggered a 10 p.m. curfew for bars, restaurants, and gyms as well as a 10-person cap at private home gatherings. In addition, Mayor Bill de Blasio is likely to shut down all classrooms across the public school system, if the daily case count surpasses 3% in the city.
Unemployment Claims Continue to Decline
One bright spot in New York City’s economic recovery was the decline in initial weekly unemployment claims last week. During the week of Nov. 7, 21,623 New Yorkers filed for first-time unemployment claims, which is 1,616 fewer than the previous week. This is the fourth straight week of significant decrease, continuing a trend of positive movement that began in late September. However, the recent increase in COVID-19 cases and talks of potential shutdowns could negatively impact unemployment. New York City still has one of the highest unemployment rates of any major city in the country at 14.1% as of Sept. 2020.
Pending Home Sales Reverse Course
Pending home sales, or homes in contract, dropped for the first time in three weeks, but are still up 13% year-over-year. Across New York City, 491 homes went into contract during the week of Nov. 7, according to data from StreetEasy. Queens and Manhattan continued to lead all borough sales, up 36% and 17%, respectively. However, enthusiasm in Brooklyn has ebbed and pending sales in the borough are now on-par with the same week last year.
Rental Prices See Drop In October
While we have yet to include apartment rental prices in the index, the declines in prices and the rise in inventory reflect New York City’s struggling economic recovery. The median rental price for a Manhattan apartment in October was $3,100, down 11.4% year-over-year, according to a report from Douglas Elliman. Moreover, the vacancy rate increased 4.11% compared to the same period last year.
Yet after months of price declines, the number of new leases rose for the first time since July 2019. There were 5,641 new leases signed in October, up 33.2% year-over-year, likely due to the increased affordability since the beginning of the pandemic.
Commercial Real Estate Struggles
New York City office and retail leasing has suffered since the pandemic was first declared in March. The third quarter saw 4.81 million square feet of office leasing in Manhattan, down 50% year-over-year, according to Optimal Spaces, which predicted that leasing volume in 2020 would be the lowest in 20 years if it continues at the current rate.
Moreover, Manhattan retail asking rents fell to their lowest point in nearly a decade at $659 per square foot during the third quarter, down 12.8% from the same time last year. Retailers are closing shop due to lowered demand and safety restrictions, and landlords are finding it difficult to find new tenants. However, some say rents have not fallen enough to fill vacancies.
Subway Ridership Declines
Subway ridership took a small hit as 1.5 million riders used the public transit system during the week of Nov. 7, compared to 1.6 million the previous week and down 69% from last year, according to data from the MTA. The MTA has invested heavily in keeping public transportation safe for riders, spending at least $371 million on contractors for COVID-19 cleaning and pandemic response. The agency has threatened to curtail service and lay off employees if it does not receive aid in the near future.
Restaurants Continue to See Declines
Restaurant reservations took another hit during the week of Nov. 7 as the estimated number of seated diners decreased 81% compared to the same period last year, according to OpenTable. This is the second consecutive week of restaurant reservation declines, potentially linked to colder temperatures setting in. Restaurants now must also limit their hours as Gov. Andrew Cuomo implemented a 10 p.m. curfew for all restaurants, bars, and gyms due to the recent increase in coronavirus cases.
How Does New York Compare to Chicago?
While every major city in America has faced economic hardship amid the pandemic, their challenges and recoveries have been unique. New York, which depends heavily on tourism and commuters to support its service-heavy economy, has been hit among the hardest regarding COVID-19 hospitalizations, unemployment and a lack of mobility.
Chicago, while more than half of New York’s size in terms of population, is also heavily dependent on its front-line workers and robust economic activity from commuters. Its unemployment rate stands at 11.3% as of September. Another great restaurant town, Chicago is also suffering from a lack of diners, according to OpenTable. Reservations are down 85.6% as of November 15.
NYC vs Chicago Unemployment Rate as of September:
NYC vs Chicago New Daily COVID-19 Hospitalizations on November 10:
NYC vs Chicago Restaurant Reservations as of November 15:
- NYC: -79.08% as of Nov. 15
- Chicago: -85.6% as of Nov. 15