New York Metropolis’s Economic system Is Dealt a New Blow by the Delta Variant

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For New York City and its trillion-dollar economy, September would mark a return to normal, a moment when Broadway theaters reopened, shops and restaurants buzzed, and tourists and office workers filled the streets again.

But this long-awaited milestone has been turned on its head by the delta variant of the coronavirus. Big company after big company has postponed plans to return to the towering towers of Manhattan. Trade fairs have been canceled. Some small businesses have evaporated orders.

It’s a setback for a city that has lagged the rest of the country in its economic recovery, with an unemployment rate of 10.5 percent, almost twice the national average. Instead of experiencing the stronger recovery it expected, New York is now facing new challenges.

“The Delta variant is a major threat to the city’s recovery,” said Mark Zandi, chief economist at Moody’s Analytics. “That will not be easy. It will be a long time before New York City regains its economic groove. “

Covid-19 cases have risen sharply in the city since early July and have reached their highest level since April. Hospital stays have not increased that much and the death rate has remained low. However, the situation is worrying enough that the city has begun to provide evidence of vaccinations from guests and staff at bars, restaurants, gyms and indoor entertainment venues – a development that was unforeseen at the start of summer.

There are signs of hope, or at least determination. Broadway shows, a big tourist draw, are well on their way to reopening in September, as are personal tuition in city schools that will free some caregivers to return to work. But even as the city sponsored an official Homecoming Week, which was crowned on Saturday by a concert in Central Park interrupted by lightning, cancellations of trade shows and other major events have increased.

Regaining momentum could be painfully slow. James Parrott, an economist at the New School’s Center for New York City Affairs, expects the city to create 20,000 to 30,000 jobs per month instead of 40,000 to 50,000 per month due to Delta.

Total employment remains more than half a million below pre-pandemic levels, with the leisure, hospitality and other commercial sectors continuing to decline sharply. The recovery of these service jobs depends in part on the return of employees who have worked remotely – and even left the city.

Many companies had set themselves the goal of getting employees back to the office, at least part-time, shortly after work day. But these plans were discarded. Facebook, which employs 4,000 people in New York, has postponed a return until January, while financial giants BlackRock and Wells Fargo are now planning a return in October.

“Data, not data, determine our approach to returning to the office,” said a statement from Facebook. “We are continuing to monitor the situation and working with experts to ensure that our plans to return to the office prioritize everyone’s safety.”

Boston Properties, which owns nearly 12 million square feet in the New York area, said about 40 percent of prepandemic residents had returned to their buildings earlier this summer based on lobby badges. In August, amid Delta’s rise and vacation travel, that number fell to around 30 percent, said Owen Thomas, the company’s CEO.

“I think going back to the office is a question of ‘when’ and not a question of ‘if’,” he said. “Delta influences the when.”

Still, there are some “if” questions. With remote working well into a second year and much of the contact between professionals and customers still being done online, it is less clear whether some suburban workers will ever return to the city and their sometimes arduous commutes.

Greenberg Traurig, a global law firm, planned a new four-story building near Grand Central Terminal in October. But many of Greenberg’s attorneys and investor clients moved to Long Island during the pandemic, prompting the law firm to reduce its Midtown office space to three floors. The company plans to open two new offices on Long Island, including one in Bridgehampton.

“For me this is a matter of course,” said Richard Rosenbaum, the chairman of the board. “We accept that this is likely to be a permanent change in the way people work.”

At the same time, company meetings are at risk again. Moody’s economist Mr. Zandi had scheduled two face-to-face speeches in September and October, but these have recently become distant events.

Updated

Aug. 22, 2021, 4:41 p.m. ET

“People are nervous about the variant,” he said. “At the very least, it is affecting New York’s recovery, and if the cases keep increasing, it will delay recovery.”

The repeatedly unusual situation at large companies as well as at events such as weddings and parties has destabilized for companies that depend on them.

Patrick Hall, a co-owner of Elan Flowers in the SoHo neighborhood of Manhattan, has grappled with a barrage of change as customers grew more suspicious of the virus.

Future brides cut their guest lists in half and switch venues at the last minute. A customer who hadn’t paid a deposit emailed Mr. Hall in October about a 300-person nonprofit gala and recently fell silent.

Some large corporations had asked Mr. Hall to prepare flowers to return to the office in the fall, but Mr. Hall wonders if he can rely on them. He had planned to add seven people to his workforce to handle business growth in September, but isn’t sure how many employees to hire.

“I’m trying to hold on and not lose,” said Mr. Hall. “I need these bigger events in September so that my business can survive.”

New York’s huge travel and leisure industries are also recovering inconsistently.

New York attracts more international tourists than any other American city. The decision by the Biden government at the end of July to continue to deny entry to visitors from Europe and several other parts of the world was therefore a blow.

“It only reinforces that the recovery won’t be in a straight line,” said Fred Dixon, executive director of NYC & Company, the city’s tourism promotion agency.

After most of its overseas tourism was written off in August, when New York is typically inundated by European vacationers, tourism officials fear the Delta variant could keep visitors off even during the crucial holiday season.

Domestic travelers have been returning to New York in increasing numbers, said Dixon – pedestrian traffic in Times Square was over 200,000 a day, more than May and June – but they don’t stay as long or spend as much as tourists from the city Foreign countries.

At the Loews Regency, a hotel on Park Avenue known as a meeting place for local power brokers and tourists, occupancy was around 75 percent, according to Jonathan M. Tisch, CEO of Loews Hotels. However, in order to reach full occupancy by the end of 2019 and beginning of 2020, business travelers and especially international tourists would have to return.

“If you could tell me the effects of the Delta variant, I could give you the occupancy for the rest of the year,” said Mr Tisch. “It’s a big unknown.”

The Javits Convention Center was preparing for its first show in more than a year when the organizers of the New York International Auto Show canceled their 10-day event there in early August. A week later, the Specialty Food Association announced that their annual Fancy Food Show, scheduled for late September in Javits, would not take place.

“Given the current significant national boom in Covid-19 cases due to the Delta variant, we believe that holding a large indoor event and protecting the general safety of all show attendees will be nearly impossible,” said the organizers of the food fair.

New York City’s largest hotel, the 2,000-room Midtown Hilton, was taking reservations and was planning to reopen in August. But the hotel’s managers canceled these bookings and temporarily put the reopening on September 1st.

Still, some companies have made headway. Genting Group, a Malaysian casino operator, opened a 400-room Hyatt Regency hotel in its Resorts World gaming room near Kennedy International Airport in early August.

After spending $ 400 million and three years building the hotel, the company didn’t want to wait any longer to open, said Bob DeSalvio, president of Genting Americas East.

“We understand that it will take a while for the trip to fully start up again,” he said, so that the hotel was 50 percent occupied. But there is clearly some catching up to do because the hotel’s first weekend is sold out, said DeSalvio.

Caroline Hirsch, the owner of Carolines on Broadway, has not canceled any shows at her comedy club and is leading the way with the New York Comedy Festival, which is slated to begin Nov. 8 and will feature more than 100 shows across town.

But this month, for the first time since it reopened in May, she noticed that some of the people who had bought tickets for the club were not showing up.

“We got off to a good start,” said Ms. Hirsch. “We thought we’d be over that hump. Now there is one more hump. We’re all back in the air. “

Ms. Hirsch hopes the city’s new ordinance, which requires proof of at least one vaccination to enter many indoor facilities, will make viewers more comfortable. The mandate went into effect on Tuesday, and on September 13, the city will begin fines for companies that fail to comply.

Other business owners are less confident about the mandate; it has led to at least one legal challenge. And as September approaches, the prospect of normal business that seemed temptingly close a few months ago is proving elusive.

A surge of students signed up at Shambhala Yoga & Dance Center in Prospect Heights, Brooklyn after face-to-face classes resumed in late April when vaccination efforts were in full swing. But in the past few days, visitor numbers have risen and grown with the news of the Delta variant outbreak, said Deanna Green, the owner of Shambhala.

“When we saw the uncertainty about the vaccines and the Delta variant, I noticed a bit of a lull,” said Ms. Green. Some yoga classes of typically 10 students went down to six or seven last week, she said.

“We really need a steady stream of people coming through the doors,” she said. “I wish there was more security.”

Eduardo Porter contributed to the coverage.