Illustration: Aïda Amer/Axios

New York City is suffering its worst year in decades. The years to come, partly as a result, could be some of its very best.

The big picture: New York, like San Francisco, entered 2020 with one overarching problem: It was far too expensive, as a place to live and work. The pandemic has fixed that problem, with both commercial and residential rents finally coming back into the realm of (relative) affordability.

By the numbers: New York has suffered more than 23,000 deaths from COVID-19, and its economic activity is projected to plunge by an astonishing 12.9% this year — a much bigger contraction than the expected national decline of 4.9%.

  • Residential rents are already down about 6%, and no one thinks they've bottomed out yet, as families with children leave the metropolis for the extra space and fresh air of the suburbs.
  • Commercial rents are being hit even harder, with Moody's projecting a 21% decline this year.
  • Big business is warning of "widespread anxiety" in the city, along with "deteriorating conditions in commercial districts."

How it works: Cities always drive economic growth. They're machines for creativity, collaboration, and serendipity. The destruction caused by a pandemic helps to clear the way for a future resurgence.

  • Remote work rests on institutional know-how built up through physical proximity: Established and experienced tend to find it relatively easy, while entry-level employees find it much harder.
  • The performing arts, in particular — a longtime strength of New York — require individuals to work closely together. But that's hard when the work pays badly and rents are prohibitive.

The people leaving New York are disproportionately older, richer, more established professionals — people who need the city less.

  • With property taxes still rising, most residential landlords will not be able to keep their properties empty while waiting for rents to rebound. So they will rent them out at much lower market-clearing rates, to less wealthy individuals who require less space per person.
  • The math: If residential space stays constant but the number of square feet per person goes down, New York's population will end up rising, rather than falling.
  • Lower rents also mean higher disposable incomes, to be spent at new local establishments that will rise where old ones were felled by the pandemic. The newer businesses will also be much less likely to cater to the rich elites.

The catch: The main driver of both new business formation and population growth in New York has historically been international immigration. So long as immigration remains suppressed, New York will suffer.

  • What they're saying: "New York City has a dynamic population, with several hundred thousand people coming and going each year. This churn has long characterized the city," says a New York City government report. "This vibrancy is one aspect of what makes New York City’s population extraordinary and different from most other places in the nation and, perhaps, the world."

The bottom line: Insofar as COVID-19 increases the churn of New York City's population, that will only help it over the long term.

Go deeper

Felix Salmon, author of Capital
Sep 17, 2020 - Economy & Business

America's cities are facing an immigration deficit

Illustration: Sarah Grillo/Axios

America's cities are facing a historic shortage of two vital resources: money and immigrants.

Why it matters: Cities drive American economic growth, and immigrants drive cities. The coronavirus pandemic has effectively stanched the main source of talent that municipal economies have long relied upon.

Updated Sep 18, 2020 - Health

U.S. coronavirus updates

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Data: The COVID Tracking Project; Note: Does not include probable deaths from New York City; Map: Andrew Witherspoon/Axios

49% of U.S. adults said in a recent Pew survey they would not get a coronavirus vaccine if one were available today.

Why it matters: All major political and demographic groups said they are less likely to get a vaccine now than they were in May, although Republicans and Black adults are the least likely.

Trump won't attend UN General Assembly in-person, White House says

Trump talks to reporters outside the White House on Sept. 17. Photo: Win McNamee/Getty Images

White House chief of staff Mark Meadows told reporters on Thursday that President Trump will not attend the United Nations General Assembly in-person this year, per pool reports.

The big picture: The UN turns 75 this year, but the pandemic has muted the anniversary to virtual meetings. Trump has yet to submit a virtual speech for the New York City event, Bloomberg's Jennifer Jacobs reports.