27 ms·

One-third of New York’s small businesses may be gone forever

265 points by ajay-d 6y ago

mensetmanusman 6y ago
This is why S&P stocks are rising. Consumers will still need to buy, but the pandemic will drive massive consolidation to large firms that can weather the financial strain.
- Pandabob 6y ago
  Apparently, if you separate the 5 biggest tech companies (Apple, Microsoft, Google, Facebook, Amazon) the rest of S&P 495 is down about 11 percent Year-to-Date [1]. [1]: https://seekingalpha.com/article/4363542-big-5-twilight-zone https://seekingalpha.com/article/4363542-big-5-twilight-zone
  - kanobo 6y ago
    Thank you, that's an excellent fact that rarely gets mentioned in the news or in comments.
    - cableshaft 6y ago
      Yeah no kidding. Was completely oblivious to this. Although I knew Amazon and Apple's stock had shot into the stratosphere somehow (Amazon I totally get, Apple not so much)
      - pradn 6y ago
        Apple might be skyrocketing b/c 1. it's post-covid revenues weren't significantly impacted 2. it's a blue chip stock in an era where safe securities like bonds yield nothing (there's no where else to put money) 3. fund managers don't want to miss out on the up-swing momentum, however irrational it may be
        Pandabob 6y ago
        Yup. I'm honestly impressed that Apple's services revenue is now 50% of iPhone revenue [1]. [1]: https://www.cnbc.com/2020/07/30/apple-aapl-earnings-q3-2020.html https://www.cnbc.com/2020/07/30/apple-aapl-earnings-q3-2020....
  - benlivengood 6y ago
    Presumably all those investors whining about large cash balances are singing a slightly different tune now.
  - projektfu 6y ago
    The Russell 3000 has recovered to above its January 2 level.
- camjohnson26 6y ago
  There’s many reasons the S&P is rising, you can’t say it’s from this without evidence.
  - missedthecue 6y ago
    more people buying than selling?
    - postalrat 6y ago
      more machines buying that selling. but will sell at a millisecond notice.
  - sdinsn 6y ago
    Large companies have easier access to debt. And in a low rate environment, solid returns from debt are pretty much guaranteed.
- cwhiz 6y ago
  S&P is rising because the fed won’t let the market fail. We will let everything else in this country turn to shit, but the fed will prop up the market no matter what. The US stock market has become essentially a Ponzi scheme at best, and an outright scam at worst.
chimeracoder 6y ago
It's so disheartening to see both Cuomo and DeBlasio's absolutely pathetic response to the pandemic - really on every level, but in the case of this article, the economic response. Nearly every other city has taken major steps to make it easier for people to spend time outdoors, for restaurants and bars to serve patrons outdoors, assistance programs for local small businesses, and so forth. By contrast, DeBlasio has been chipping away at Open Streets, cancelled Summer Streets, and both he and Cuomo have been actively impeding restaurants and bars from adapting to serve food and alcohol outdoors. They've insisted that bars cannot serve alcohol without serving "real food" (nachos doesn't count), which is a huge blow to bars which don't have a full kitchen. Even for restaurants and bars which do, though, they've been incredibly aggressive with issuing citations. Many have complained that, if a server clears the empty dinner plates before patrons are finished with their drinks, state inspectors will cite them because "there's no food", even though the bill shows that they were charged for dinner. Others have complained that the city has cited them for "violations", but unlike the health inspectors, doesn't actually provide a list of the offenses that need to be corrected. In addition, they've provided ~zero financial assistance for small businesses - particularly bars and restaurants, which are hit the hardest. That's in stark contrast to other cities in the US and elsewhere, which have given direct cash assistance to help them weather the crisis. It's a disaster all around, and neither the governor nor the mayor have shown any interest in taking meaningful steps to support the state's largest economy. (Cuomo has done a better job at framing his actions to the press, but when you actually look at what he's done, he's done a really awful job).
- king_magic 6y ago
  I'd rather not contract COVID-19 and die as a result of an outing to a restaurant or a bar. I'm fine with what Cuomo and DeBlasio are doing.
  - departure 6y ago
    Then don't go to a restaurant or bar. Down here in Texas we opened in May and left it up to the individual to make the health choice. I'm active and going to the gym daily and bars during the weekend, but I have friends who won't go outside and haven't dined in a restaurant since March.
Mengkudulangsat 6y ago
Is there any proven mechanism to put a segment of society "on-pause" for while? Each business entity submits a hibernation plan to central authority, funds provided and liabilities put on hold by decree. What do governments do historically during sieges and plagues? Are we doomed to live through these boom-bust cycles over and over again?
- mc32 6y ago
  Historically people starved and tried to make ends meet as best they could. But if you were to ask the Kulaks (basically besieged by their gov), you’ll notice that starvation was a big part. Are we doomed to cycles during (our lifetimes)? No, it could be all downhill for centuries. (Which I think has been the case when empires collapse, be they Roman, Dynastic Chinese, from the steppes, Mayan, etc.
- staplers 6y ago
  Are we doomed to live through these boom-bust cycles over and over again? Yes, I'd say it's a rather integral part of existing in the universe. All systems experience these cycles on some time scale.
- Wowfunhappy 6y ago
  The problem is that people can’t hibernate. All of the employees, all along the chain, need to eat.
  - thescriptkiddie 6y ago
    There is no shortage of food at the moment. Just pay people to stay home.
    - missedthecue 6y ago
      until what?
    - SpicyLemonZest 6y ago
      You can do that, but then the system's not really in hibernation; you've just replaced it with a temporary UBI. There's no reason to expect the transition back to a normal market economy to be particularly smooth.
tehjoker 6y ago
This is what Lenin said about financial capitalism and monopoly. Every boom-bust cycle, endemic to capitalism, results in further consolidation. The free market / small producer capitalism that everyone says they like died around the 1880s-1890s when large firms began to dominate. Everything said in favor of that form since then has been essentially nostalgia for a lost time that wasn't even that good to begin with. If the trust busters don't come back, we will see essentially a kind of feudalist economy develop around a few extraordinarily powerful companies as every ladder is pulled up behind them and smaller institutions are "creatively destroyed". https://en.wikipedia.org/wiki/Imperialism,_the_Highest_Stage_of_Capitalism https://en.wikipedia.org/wiki/Imperialism,_the_Highest_Stage...
- Ericson2314 6y ago
  This shouldn't be down-voted. Just because you don't like something Lenin did doesn't mean all his observations are wrong. I recently found https://ilr.law.uiowa.edu/print/volume-100-issue-5/all-i-really-need-to-know-about-antitrust-i-learned-in-1912/ https://ilr.law.uiowa.edu/print/volume-100-issue-5/all-i-rea... which was a great read. Eugene V Debs had a similar conclusion about consolidation being inevitable, but thought that that was a good thing. And to be clear, whether competition is possible / what's the right trade-off between efficiency and robustness, is really important to grapple with. If we don't know how to e.g. break up Google, proposals like having workers on boards become dramatically more essential.
  - sdinsn 6y ago
    > This shouldn't be down-voted. Just because you don't like something Lenin did doesn't mean all his observations are wrong. He is probably being downvoted for saying that consolidation will lead to feudalism. That is a ridiculous idea that deserves a downvote!
    - tonyedgecombe 6y ago
      He said a "feudalist economy" which seems an apt description for an economy run by a handful of companies.
baggy_trough 6y ago
Why so optimistic?
- Whinner 6y ago
  I agree that it's going to get worse. There is a mass exodus out of NYC. I live in northern NJ and lots of my town commutes to NYC. Anecdotally, most of the people I know who worked in NYC are not going back anytime soon. There are bidding wars for smallish houses where a 350k house gets 20 bids and goes for 10% over asking price. People are trying to get out of the city by stay close to at least see how things shake out. One neighbor is talking of moving to a low cost state in the middle of the country as their NYC office is not reopening, but they are all working remotely. Salary arbitrage.
- mtalantikite 6y ago
  Not sure why you’re being downvoted, but if we go through another wave this winter only losing one-third does seem optimistic. Every time I walk around my neighborhood (Williamsburg) I notice another newly shuttered storefront. Many places I loved are sadly gone and never coming back. The building my studio space I keep to work out of is in is filling up with vacancies and eviction notices — I go in occasionally to grab mail and water plants, but I don’t intend on renewing my lease on it this fall. I’m generally ride or die NYC, but after 5 months of quarantine the idea of staying inside through the winter of 2020-2021 is sounding pretty bleak. It’s the first time in 13 years I’ve considered leaving temporarily. This really is just the beginning.
  - baggy_trough 6y ago
    People simply can't conceive of the magnitude of the slow motion collapse that is occurring. It's a familiarity / recency bias.
tarr11 6y ago
Many small businesses have signed personal guarantees on their commercial leases, meaning that landlords will come after them even after they've closed. Restaurants for example will often have 5-10 year lease terms.
- icelancer 6y ago
  >> Many small businesses have signed personal guarantees on their commercial leases, meaning that landlords will come after them even after they've closed. Yep. Just signed a 7 year lease and personally guaranteed it. More things few people are talking about when advocating for lockdowns.
  - toomuchtodo 6y ago
    Personal bankruptcy is only on your credit report for 7 years, versus being on the hook for sums you could never afford to repay. You'll be eligible for credit right away after the discharge (because you can't go BK again for 8 years), and eligible for a low down payment FHA mortgage (3-5% down) after two years (from discharge date).
    - ouid 6y ago
      furthermore, it seems that it should be easier to obtain credit if you have no debt than if you have more debt than collateral, and obviously no ability to pay it.
      - betterunix2 6y ago
        Not if the reason you have no debt is that you had the courts erase it all.
    - Grae 6y ago
      I don't understand why this is being downvoted. Bankruptcy is a tool to encourage efficient risk-taking and solving otherwise tricky collective action problems for creditors. There's an unfortunate stigma about bankruptcy in the U.S. which leads to _far_ fewer people/businesses filing bankruptcy than should be. No one is better off limping along under unsustainable debt, not businesses and not individuals. We need to get rid of this stigma and let people use the tools we put in place to solve these problems.
MattGaiser 6y ago
What percent of small businesses fail every year? To understand the damage, you have to know how what the baseline closure rate is. I am not sure what the rate is in the restaurant industry, but it seems extremely high even in regular times.
- JMTQp8lwXL 6y ago
  This is the businesses that made it. The vast majority fail. The fact that one-third of a very small percentage are newly failing is significant.
  - MattGaiser 6y ago
    > The fact that one-third of a very small percentage are newly failing is significant. Completely reasonable. But how significant? Is 1/3 50% more than usual? Is it 3x as many as usual? Is it an order of magnitude more?
otoburb 6y ago
>>Between early March and early May, roughly 110,000 small businesses nationwide shut down, according to researchers at Harvard. I tracked down the paper[1] they referenced and Table 5 was an eye opener. While "only" 110K small businesses were estimated to have shut down out of 30M[2] small businesses nationwide (0.37%), the really grim survey results are summarized in Table 5 of the paper titled "Reported Likelihood of Remaining Open by Industry and Hypothetical Crisis Duration". The restaurant/bar/catering category surveyed back in late March believed their chance of survival would only be 0.15 if the shutdowns lasted through to December. [1] https://www.nber.org/papers/w26989.pdf https://www.nber.org/papers/w26989.pdf [2] https://cdn.advocacy.sba.gov/wp-content/uploads/2019/04/23142610/2019-Small-Business-Profiles-States-Territories.pdf https://cdn.advocacy.sba.gov/wp-content/uploads/2019/04/2314...
paulgb 6y ago
It seems strikingly brazen for the landlords to start asking for full rent in this market. Even before covid, vacant storefronts were sitting on the market for months or years due to retail and banking moving online[1]. Good luck finding someone who wants to start a new restaurant in the next 9 months or so. Even if they think they can force the current tenant into bankruptcy and collect, there won't be much to collect after taking away the tenant's only income stream. It all just feels very short-sighted. [1] see, e.g., from 2018: https://www.nytimes.com/interactive/2018/09/06/nyregion/nyc-storefront-vacancy.html https://www.nytimes.com/interactive/2018/09/06/nyregion/nyc-...
- qeternity 6y ago
  It’s all absurdly shortsighted and instead of throwing helicopter cash around the Fed should have sat all major banks and asset managers around and said “we’ll support your principal but you agree to a moratorium on coupon payments on MBS” and then force these to be passed on to landlords and then on to tenants. Everyone gets (mostly) what they want.
  - claudeganon 6y ago
    What you’re missing is that this chain represents a social hierarchy that has to be preserved above and beyond any material arrangement. Bankers > borrowers > tenants. You can bailout the upper echelons of the first two, but anything further calls into question the whole validity of the arrangement. That is forbidden.
- itsoktocry 6y ago
  >Even if they think they can force the current tenant into bankruptcy and collect, there won't be much to collect after taking away the tenant's only income stream. A lot of landlords have no choice. They themselves are businesses, often leveraged to the hilt, with not a whole lot of room to offer grace. And yes, I realize there are massive REITs behind some of these properties, that have large earnings and reap huge windfalls for shareholders. That doesn't mean they're equipped to receive no income for months during a pandemic. It's sort of the way our economy works: right on the edge at all times.
zxcvbn4038 6y ago
This might actually be a good thing in the long run. Real estate prices in NYC were insane before the pandemic, landlords would purposefully keep property off the market and toss out long established businesses on hopes of scoring a payday from a new renter. Now we are in a situation where it is just impossible to pack enough people into a space to earn a profit at $3700 per square foot. No doubt it will cause some people a lot of pain up front but eventually it might be possible for small businesses and families to be in Manhattan again.
pnathan 6y ago
> “It’s the most frustrating situation because it’s not about passion anymore or the work you put in or the hours you put in,” he said. “It’s all about the mitigating circumstances that are out of your control.” this is generally true about business. if the regulatory environment, the marketing is good, or the loan office is good (etc), you get lucky. if a celebrity likes your yoghurt. etc. hard work is the other side of this, but the role of luck is huge. anyway, looks like we're headed into the first real bust in a long long time.
bogomipz 6y ago
Another source of some sobering figures was the NYC Hospitality Alliance which just published their July Rent Report. 83% of respondents did not pay their full rent in July and 37% of respondents reported they paid no rent.[1] [1] https://thenycalliance.org/assets/documents/informationitems/jlBDT.pdf https://thenycalliance.org/assets/documents/informationitems...
LatteLazy 6y ago
"may" is an antagonym: may means the same as may not.
- behindsight 6y ago
  Although I understand the rationale, lumping vague probability words like "may", "could", "might" as antagonyms (auto-antonyms) doesn't seem valid. Whether you use "may" or "may not" would indicate the leanings of your null hypothesis / default assumption.
yashap 6y ago
It’s insane to me that we don’t just make masks 100% mandatory when you’re outside your own home. We don’t have exact numbers on how effective masks are, but when everyone is wearing them, evidence suggests “very effective.” Anecdotal examples - a man with a dry cough, that was later diagnosed to be COVID, wore a mask on the long flight from Wuhan to Toronto, had extended/close contact with 25 people, but he was wearing a mask, and none of them contracted it from him [1]. 2 hairdressers in Missouri had COVID, but they and their clients all wore masks, they had extended close contact with 140 people and none of them got COVID [2]. We know masks are most effective when the infected person wears them, and we know that asymptomatic spreaders are common, so really we just need everyone wearing masks for all close personal interactions. We could keep the economy decently open AND keep COVID cases down dramatically with a simple law to mandate masks 100% of the time when outside your own home. In plenty of professions people are wearing masks all day long now, it’s uncomfortable at first, but you get used to it. Crazy that this isn’t being strongly considered. [1] https://www.cmaj.ca/content/192/15/E410 https://www.cmaj.ca/content/192/15/E410 [2] https://www.washingtonpost.com/business/2020/06/17/masks-salons-missouri/ https://www.washingtonpost.com/business/2020/06/17/masks-sal...
- matz1 6y ago
  >It’s insane to me that we don’t just make masks 100% mandatory when you’re outside your own home. We can just reopen reopen right now. Yes covid spread easily but we already know that majority of covid cases its either asymptomatic or only mild symptom. At this point lockdown create more problem than it solves.
- staplers 6y ago
  just make masks 100% mandatory That would require me to confess that other people might know more than me. Which some conflate to total loss of all personal liberty.
  - msandford 6y ago
    As a counter-argument thought experiment to try and understand how some people might feel that way, imagine this situation: We've got an epidemic of terrorist shootings in the US. Some law enforcement experts suggest that not only should open carry be legalized everywhere in the US, but that carrying a gun should be mandatory while in public. It's the only way to stop the shootings. I'm not going to suggest that this is in any way a 100% equivalent argument, far from it. But it might help you get a feel for why some folks are opposed to mandatory masks, even if they seem entirely sensible.
dharma1 6y ago
We may only be halfway, one third or less into this pandemic. I really hope that 1) the early vaccines will work 2) other mitigation strategies (masks, social distancing, quick tests at scale etc) will succeed in keeping R under 1 and small businesses above breakeven in case we're in for another 1-2 years of covid flare ups If the above don't work, we could be looking at mass unemployment, unbearable private and government debt, and more civil unrest
- ba2plus 6y ago
  >If the above don't work, we could be looking at mass unemployment, unbearable private and government debt, and more civil unrest Given the fact that there's never been a successful coronavirus vaccine, and that there's a huge portion of the American population that regards mask-wearing and hand-washing to be tyrannical affronts to civil liberties, I think we all know how things are going to play out.
deleted 6y ago
[deleted]
fallingfrog 6y ago
What do you all think is going to happen when climate change hits? This little crisis is all just a rehearsal for the real thing, you know.
gregshap 6y ago
> "She asked her landlord for a break on her $6,000 a month rent, but he refused. Ms. Dillon said she decided in early April to close down." Commercial evictions have been stopped in New York since March. It seems like a lot of people underestimate their bargaining power in a pandemic. Who else is the landlord going to rent to anyway?

265 points by ajay-d 6y ago

This is why S&P stocks are rising. Consumers will still need to buy, but the pandemic will drive massive consolidation to large firms that can weather the financial strain.

Pandabob 6y ago
Apparently, if you separate the 5 biggest tech companies (Apple, Microsoft, Google, Facebook, Amazon) the rest of S&P 495 is down about 11 percent Year-to-Date [1]. [1]: https://seekingalpha.com/article/4363542-big-5-twilight-zone https://seekingalpha.com/article/4363542-big-5-twilight-zone
- kanobo 6y ago
  Thank you, that's an excellent fact that rarely gets mentioned in the news or in comments.
  - cableshaft 6y ago
    Yeah no kidding. Was completely oblivious to this. Although I knew Amazon and Apple's stock had shot into the stratosphere somehow (Amazon I totally get, Apple not so much)
    - pradn 6y ago
      Apple might be skyrocketing b/c 1. it's post-covid revenues weren't significantly impacted 2. it's a blue chip stock in an era where safe securities like bonds yield nothing (there's no where else to put money) 3. fund managers don't want to miss out on the up-swing momentum, however irrational it may be
      - Pandabob 6y ago
        Yup. I'm honestly impressed that Apple's services revenue is now 50% of iPhone revenue [1]. [1]: https://www.cnbc.com/2020/07/30/apple-aapl-earnings-q3-2020.html https://www.cnbc.com/2020/07/30/apple-aapl-earnings-q3-2020....
- benlivengood 6y ago
  Presumably all those investors whining about large cash balances are singing a slightly different tune now.
- projektfu 6y ago
  The Russell 3000 has recovered to above its January 2 level.
camjohnson26 6y ago
There’s many reasons the S&P is rising, you can’t say it’s from this without evidence.
- missedthecue 6y ago
  more people buying than selling?
  - postalrat 6y ago
    more machines buying that selling. but will sell at a millisecond notice.
- sdinsn 6y ago
  Large companies have easier access to debt. And in a low rate environment, solid returns from debt are pretty much guaranteed.
cwhiz 6y ago
S&P is rising because the fed won’t let the market fail. We will let everything else in this country turn to shit, but the fed will prop up the market no matter what. The US stock market has become essentially a Ponzi scheme at best, and an outright scam at worst.

chimeracoder 6y ago

It's so disheartening to see both Cuomo and DeBlasio's absolutely pathetic response to the pandemic - really on every level, but in the case of this article, the economic response. Nearly every other city has taken major steps to make it easier for people to spend time outdoors, for restaurants and bars to serve patrons outdoors, assistance programs for local small businesses, and so forth. By contrast, DeBlasio has been chipping away at Open Streets, cancelled Summer Streets, and both he and Cuomo have been actively impeding restaurants and bars from adapting to serve food and alcohol outdoors. They've insisted that bars cannot serve alcohol without serving "real food" (nachos doesn't count), which is a huge blow to bars which don't have a full kitchen. Even for restaurants and bars which do, though, they've been incredibly aggressive with issuing citations. Many have complained that, if a server clears the empty dinner plates before patrons are finished with their drinks, state inspectors will cite them because "there's no food", even though the bill shows that they were charged for dinner. Others have complained that the city has cited them for "violations", but unlike the health inspectors, doesn't actually provide a list of the offenses that need to be corrected. In addition, they've provided ~zero financial assistance for small businesses - particularly bars and restaurants, which are hit the hardest. That's in stark contrast to other cities in the US and elsewhere, which have given direct cash assistance to help them weather the crisis. It's a disaster all around, and neither the governor nor the mayor have shown any interest in taking meaningful steps to support the state's largest economy. (Cuomo has done a better job at framing his actions to the press, but when you actually look at what he's done, he's done a really awful job).

king_magic 6y ago
I'd rather not contract COVID-19 and die as a result of an outing to a restaurant or a bar. I'm fine with what Cuomo and DeBlasio are doing.
- departure 6y ago
  Then don't go to a restaurant or bar. Down here in Texas we opened in May and left it up to the individual to make the health choice. I'm active and going to the gym daily and bars during the weekend, but I have friends who won't go outside and haven't dined in a restaurant since March.

Mengkudulangsat 6y ago

Is there any proven mechanism to put a segment of society "on-pause" for while? Each business entity submits a hibernation plan to central authority, funds provided and liabilities put on hold by decree. What do governments do historically during sieges and plagues? Are we doomed to live through these boom-bust cycles over and over again?

mc32 6y ago
Historically people starved and tried to make ends meet as best they could. But if you were to ask the Kulaks (basically besieged by their gov), you’ll notice that starvation was a big part. Are we doomed to cycles during (our lifetimes)? No, it could be all downhill for centuries. (Which I think has been the case when empires collapse, be they Roman, Dynastic Chinese, from the steppes, Mayan, etc.
staplers 6y ago
Are we doomed to live through these boom-bust cycles over and over again? Yes, I'd say it's a rather integral part of existing in the universe. All systems experience these cycles on some time scale.
Wowfunhappy 6y ago
The problem is that people can’t hibernate. All of the employees, all along the chain, need to eat.
- thescriptkiddie 6y ago
  There is no shortage of food at the moment. Just pay people to stay home.
  - missedthecue 6y ago
    until what?
  - SpicyLemonZest 6y ago
    You can do that, but then the system's not really in hibernation; you've just replaced it with a temporary UBI. There's no reason to expect the transition back to a normal market economy to be particularly smooth.

tehjoker 6y ago

This is what Lenin said about financial capitalism and monopoly. Every boom-bust cycle, endemic to capitalism, results in further consolidation. The free market / small producer capitalism that everyone says they like died around the 1880s-1890s when large firms began to dominate. Everything said in favor of that form since then has been essentially nostalgia for a lost time that wasn't even that good to begin with. If the trust busters don't come back, we will see essentially a kind of feudalist economy develop around a few extraordinarily powerful companies as every ladder is pulled up behind them and smaller institutions are "creatively destroyed". https://en.wikipedia.org/wiki/Imperialism,_the_Highest_Stage_of_Capitalism https://en.wikipedia.org/wiki/Imperialism,_the_Highest_Stage...

Ericson2314 6y ago
This shouldn't be down-voted. Just because you don't like something Lenin did doesn't mean all his observations are wrong. I recently found https://ilr.law.uiowa.edu/print/volume-100-issue-5/all-i-really-need-to-know-about-antitrust-i-learned-in-1912/ https://ilr.law.uiowa.edu/print/volume-100-issue-5/all-i-rea... which was a great read. Eugene V Debs had a similar conclusion about consolidation being inevitable, but thought that that was a good thing. And to be clear, whether competition is possible / what's the right trade-off between efficiency and robustness, is really important to grapple with. If we don't know how to e.g. break up Google, proposals like having workers on boards become dramatically more essential.
- sdinsn 6y ago
  > This shouldn't be down-voted. Just because you don't like something Lenin did doesn't mean all his observations are wrong. He is probably being downvoted for saying that consolidation will lead to feudalism. That is a ridiculous idea that deserves a downvote!
  - tonyedgecombe 6y ago
    He said a "feudalist economy" which seems an apt description for an economy run by a handful of companies.

baggy_trough 6y ago

Why so optimistic?

Whinner 6y ago
I agree that it's going to get worse. There is a mass exodus out of NYC. I live in northern NJ and lots of my town commutes to NYC. Anecdotally, most of the people I know who worked in NYC are not going back anytime soon. There are bidding wars for smallish houses where a 350k house gets 20 bids and goes for 10% over asking price. People are trying to get out of the city by stay close to at least see how things shake out. One neighbor is talking of moving to a low cost state in the middle of the country as their NYC office is not reopening, but they are all working remotely. Salary arbitrage.
mtalantikite 6y ago
Not sure why you’re being downvoted, but if we go through another wave this winter only losing one-third does seem optimistic. Every time I walk around my neighborhood (Williamsburg) I notice another newly shuttered storefront. Many places I loved are sadly gone and never coming back. The building my studio space I keep to work out of is in is filling up with vacancies and eviction notices — I go in occasionally to grab mail and water plants, but I don’t intend on renewing my lease on it this fall. I’m generally ride or die NYC, but after 5 months of quarantine the idea of staying inside through the winter of 2020-2021 is sounding pretty bleak. It’s the first time in 13 years I’ve considered leaving temporarily. This really is just the beginning.
- baggy_trough 6y ago
  People simply can't conceive of the magnitude of the slow motion collapse that is occurring. It's a familiarity / recency bias.

tarr11 6y ago

Many small businesses have signed personal guarantees on their commercial leases, meaning that landlords will come after them even after they've closed. Restaurants for example will often have 5-10 year lease terms.

icelancer 6y ago
>> Many small businesses have signed personal guarantees on their commercial leases, meaning that landlords will come after them even after they've closed. Yep. Just signed a 7 year lease and personally guaranteed it. More things few people are talking about when advocating for lockdowns.
- toomuchtodo 6y ago
  Personal bankruptcy is only on your credit report for 7 years, versus being on the hook for sums you could never afford to repay. You'll be eligible for credit right away after the discharge (because you can't go BK again for 8 years), and eligible for a low down payment FHA mortgage (3-5% down) after two years (from discharge date).
  - ouid 6y ago
    furthermore, it seems that it should be easier to obtain credit if you have no debt than if you have more debt than collateral, and obviously no ability to pay it.
    - betterunix2 6y ago
      Not if the reason you have no debt is that you had the courts erase it all.
  - Grae 6y ago
    I don't understand why this is being downvoted. Bankruptcy is a tool to encourage efficient risk-taking and solving otherwise tricky collective action problems for creditors. There's an unfortunate stigma about bankruptcy in the U.S. which leads to _far_ fewer people/businesses filing bankruptcy than should be. No one is better off limping along under unsustainable debt, not businesses and not individuals. We need to get rid of this stigma and let people use the tools we put in place to solve these problems.

MattGaiser 6y ago

What percent of small businesses fail every year? To understand the damage, you have to know how what the baseline closure rate is. I am not sure what the rate is in the restaurant industry, but it seems extremely high even in regular times.

JMTQp8lwXL 6y ago
This is the businesses that made it. The vast majority fail. The fact that one-third of a very small percentage are newly failing is significant.
- MattGaiser 6y ago
  > The fact that one-third of a very small percentage are newly failing is significant. Completely reasonable. But how significant? Is 1/3 50% more than usual? Is it 3x as many as usual? Is it an order of magnitude more?

otoburb 6y ago

>>Between early March and early May, roughly 110,000 small businesses nationwide shut down, according to researchers at Harvard. I tracked down the paper[1] they referenced and Table 5 was an eye opener. While "only" 110K small businesses were estimated to have shut down out of 30M[2] small businesses nationwide (0.37%), the really grim survey results are summarized in Table 5 of the paper titled "Reported Likelihood of Remaining Open by Industry and Hypothetical Crisis Duration". The restaurant/bar/catering category surveyed back in late March believed their chance of survival would only be 0.15 if the shutdowns lasted through to December. [1] https://www.nber.org/papers/w26989.pdf https://www.nber.org/papers/w26989.pdf [2] https://cdn.advocacy.sba.gov/wp-content/uploads/2019/04/23142610/2019-Small-Business-Profiles-States-Territories.pdf https://cdn.advocacy.sba.gov/wp-content/uploads/2019/04/2314...

paulgb 6y ago

It seems strikingly brazen for the landlords to start asking for full rent in this market. Even before covid, vacant storefronts were sitting on the market for months or years due to retail and banking moving online[1]. Good luck finding someone who wants to start a new restaurant in the next 9 months or so. Even if they think they can force the current tenant into bankruptcy and collect, there won't be much to collect after taking away the tenant's only income stream. It all just feels very short-sighted. [1] see, e.g., from 2018: https://www.nytimes.com/interactive/2018/09/06/nyregion/nyc-storefront-vacancy.html https://www.nytimes.com/interactive/2018/09/06/nyregion/nyc-...

qeternity 6y ago
It’s all absurdly shortsighted and instead of throwing helicopter cash around the Fed should have sat all major banks and asset managers around and said “we’ll support your principal but you agree to a moratorium on coupon payments on MBS” and then force these to be passed on to landlords and then on to tenants. Everyone gets (mostly) what they want.
- claudeganon 6y ago
  What you’re missing is that this chain represents a social hierarchy that has to be preserved above and beyond any material arrangement. Bankers > borrowers > tenants. You can bailout the upper echelons of the first two, but anything further calls into question the whole validity of the arrangement. That is forbidden.
itsoktocry 6y ago
>Even if they think they can force the current tenant into bankruptcy and collect, there won't be much to collect after taking away the tenant's only income stream. A lot of landlords have no choice. They themselves are businesses, often leveraged to the hilt, with not a whole lot of room to offer grace. And yes, I realize there are massive REITs behind some of these properties, that have large earnings and reap huge windfalls for shareholders. That doesn't mean they're equipped to receive no income for months during a pandemic. It's sort of the way our economy works: right on the edge at all times.

zxcvbn4038 6y ago

This might actually be a good thing in the long run. Real estate prices in NYC were insane before the pandemic, landlords would purposefully keep property off the market and toss out long established businesses on hopes of scoring a payday from a new renter. Now we are in a situation where it is just impossible to pack enough people into a space to earn a profit at $3700 per square foot. No doubt it will cause some people a lot of pain up front but eventually it might be possible for small businesses and families to be in Manhattan again.

pnathan 6y ago

> “It’s the most frustrating situation because it’s not about passion anymore or the work you put in or the hours you put in,” he said. “It’s all about the mitigating circumstances that are out of your control.” this is generally true about business. if the regulatory environment, the marketing is good, or the loan office is good (etc), you get lucky. if a celebrity likes your yoghurt. etc. hard work is the other side of this, but the role of luck is huge. anyway, looks like we're headed into the first real bust in a long long time.

bogomipz 6y ago

Another source of some sobering figures was the NYC Hospitality Alliance which just published their July Rent Report. 83% of respondents did not pay their full rent in July and 37% of respondents reported they paid no rent.[1] [1] https://thenycalliance.org/assets/documents/informationitems/jlBDT.pdf https://thenycalliance.org/assets/documents/informationitems...

LatteLazy 6y ago

"may" is an antagonym: may means the same as may not.

behindsight 6y ago
Although I understand the rationale, lumping vague probability words like "may", "could", "might" as antagonyms (auto-antonyms) doesn't seem valid. Whether you use "may" or "may not" would indicate the leanings of your null hypothesis / default assumption.

yashap 6y ago

It’s insane to me that we don’t just make masks 100% mandatory when you’re outside your own home. We don’t have exact numbers on how effective masks are, but when everyone is wearing them, evidence suggests “very effective.” Anecdotal examples - a man with a dry cough, that was later diagnosed to be COVID, wore a mask on the long flight from Wuhan to Toronto, had extended/close contact with 25 people, but he was wearing a mask, and none of them contracted it from him [1]. 2 hairdressers in Missouri had COVID, but they and their clients all wore masks, they had extended close contact with 140 people and none of them got COVID [2]. We know masks are most effective when the infected person wears them, and we know that asymptomatic spreaders are common, so really we just need everyone wearing masks for all close personal interactions. We could keep the economy decently open AND keep COVID cases down dramatically with a simple law to mandate masks 100% of the time when outside your own home. In plenty of professions people are wearing masks all day long now, it’s uncomfortable at first, but you get used to it. Crazy that this isn’t being strongly considered. [1] https://www.cmaj.ca/content/192/15/E410 https://www.cmaj.ca/content/192/15/E410 [2] https://www.washingtonpost.com/business/2020/06/17/masks-salons-missouri/ https://www.washingtonpost.com/business/2020/06/17/masks-sal...

matz1 6y ago
>It’s insane to me that we don’t just make masks 100% mandatory when you’re outside your own home. We can just reopen reopen right now. Yes covid spread easily but we already know that majority of covid cases its either asymptomatic or only mild symptom. At this point lockdown create more problem than it solves.
staplers 6y ago
just make masks 100% mandatory That would require me to confess that other people might know more than me. Which some conflate to total loss of all personal liberty.
- msandford 6y ago
  As a counter-argument thought experiment to try and understand how some people might feel that way, imagine this situation: We've got an epidemic of terrorist shootings in the US. Some law enforcement experts suggest that not only should open carry be legalized everywhere in the US, but that carrying a gun should be mandatory while in public. It's the only way to stop the shootings. I'm not going to suggest that this is in any way a 100% equivalent argument, far from it. But it might help you get a feel for why some folks are opposed to mandatory masks, even if they seem entirely sensible.

dharma1 6y ago

We may only be halfway, one third or less into this pandemic. I really hope that 1) the early vaccines will work 2) other mitigation strategies (masks, social distancing, quick tests at scale etc) will succeed in keeping R under 1 and small businesses above breakeven in case we're in for another 1-2 years of covid flare ups If the above don't work, we could be looking at mass unemployment, unbearable private and government debt, and more civil unrest

ba2plus 6y ago
>If the above don't work, we could be looking at mass unemployment, unbearable private and government debt, and more civil unrest Given the fact that there's never been a successful coronavirus vaccine, and that there's a huge portion of the American population that regards mask-wearing and hand-washing to be tyrannical affronts to civil liberties, I think we all know how things are going to play out.

deleted 6y ago

[deleted]

fallingfrog 6y ago

What do you all think is going to happen when climate change hits? This little crisis is all just a rehearsal for the real thing, you know.

gregshap 6y ago

> "She asked her landlord for a break on her $6,000 a month rent, but he refused. Ms. Dillon said she decided in early April to close down." Commercial evictions have been stopped in New York since March. It seems like a lot of people underestimate their bargaining power in a pandemic. Who else is the landlord going to rent to anyway?