“They used to stand at the bar three deep,” says John Moran, surveying the long, empty counter at Killarney Rose, a Wall Street bar that would, in another era, have been stuffed with early-shift construction workers and, at lunch and late into the evening, suited bankers.
The world’s pre-eminent financial thoroughfare – at least throughout the 20th century – is a ghost of what it once was. The New York Stock Exchange and Nasdaq are still located here, but dozens of financial institutions have emptied out from New York’s financial district in an exodus that started in the wake of 9/11 and has been hastened by Covid.
This week Deutsche Bank, the last major bank on the storied block, announced it would accelerate its departure from its offices at 60 Wall Street and could move as many as half of its 4,600 Manhattan staff to regional offices in the next five years.
Deutsche’s move comes as no surprise to Moran. New York’s financial district has been transforming into a residential zone – with a smattering of media and tech firms including Condé Nast, Time Inc, Group M and Spotify – for years.
“This all started after 9/11. People were scared because Wall Street was a target. As soon as that happened, it was like: let’s get out,’” Moran said.
Deutsche’s plan, which is to move some staff to Columbus Circle near Central Park, resembles a pattern: leave Wall Street for other areas in the city and then begin to decentralise operations away from Manhattan entirely.
JP Morgan, which was headquartered at 23 Wall Street from 1869, is following a plan to move jobs out of Manhattan after the mayor, Bill de Blasio, denied the bank $1bn in tax incentives to keep employees in New York. Last week Bloomberg reported that Goldman Sachs was weighing plans for a new Florida hub to house its key asset management division, in part to cut $1.3bn in costs.
But it’s one thing to relocate administrative, technology and business operations jobs, and another to move client-facing operations – a move that could diminish New York’s prestige as home of the US financial industry and exacerbate its projected $9bn budget deficit over the next two years.
If Goldman leaves its Wall Street-adjacent HQ, it will follow Morgan Stanley, which relocated in the mid-1990s, and JP Morgan, which quit in 2000. Credit Suisse, Barclays, UBS and others have established hubs in Florida, Tennessee, North Carolina and Utah.
Manhattan now has the most office space available since the aftermath of the 9/11 attacks. According to The Alliance for Downtown New York, commercial leasing in lower Manhattan set an all-time low at 455,000 sq ft in the third quarter, with leasing activity 64% below the five-year quarterly average and only 11% of office-occupying workers in Manhattan returned to their desks through September.
In 2008, financial and insurance firms made up 54% of office occupiers, with media and tech at 5%. The figures are now 26% and 22% respectively, according to Jessica Lappin, president of the Alliance for Downtown New York.
“Finance firms have been downsizing for quite sometime,” she said. “While that’s not welcome news, it’s been exciting to see large, household names move in. It’s a different type of employee – for one thing they wear hoodies and sneakers, they keep different hours and they bring a different kind of vibrancy to the area.”
But that vibrancy can be hard to detect. Street-level “for lease” signs are everywhere. Businesses that had survived the exodus of bankers have been hit hard by the pandemic. China Chalet, a popular restaurant turned nightclub, has closed for good. LVMH-owned Tiffany was on Monday empty of pre-holiday shoppers. Cobblers and barbers are starved for custom. “You see the situation. There’s nobody here,” said one.
Moran said: “The new crowd, the millennials, are a totally different animal. It’s all 50-inch TVs, staying home and having a few friends over for a takeout. Technology has changed everything. You don’t see people. When this Covid business is over, the buildings are going to come back half-full. And that’s a fact.”
The estate agent Colliers International painted a bleaker picture, reporting that leasing was down by nearly 80% comparedwith a year ago and down by 55% from October. “This is higher than what it was in the Great Recession [of 2008-9] and higher than what it was in the 2001 recession,” said Collier’s Franklin Wallach.
Christiana Riley, the chief executive of Deutsche in the Americas, said she was “optimistic that New York remains, to a degree, a hub” and institutional capital there would make it “meaningful for there to be a centralised presence” in the city, but it would not be “relevant for everyone” working in the industry.
The tech and media sectors and residential property have so far failed to inject comparable energy into the area. Apple and Amazon have leased large spaces near Penn Station, the city’s main transport hub that is within striking distance of Google’s vast westside HQ. The publisher Condé Nast, a key tenant at One World Trade Center, is reportedly looking to get out of a $2bn real estate deal that had in any case been subsidised by raised tolls at the city’s approaches.
The larger questions remain unanswered. Cushman and Wakefield, one of New York’s largest commercial property landlords, recently published a study into the post-pandemic workplace that argued that the future of the office “will be characterised by organisations determining the right balance of remote work to advance their organisational priorities rather than one that sees a move toward an office-free world”.
Richard Rubin, a west coast-based investor turning distressed hotels into residential properties, rejected as “preposterous” the notion that companies would need more office space because of social distancing. “There’s been a seismic shift in the last year and we know from a productivity perspective that people are working very effectively from home,” Rubin said.
He predicted there would be “absolute carnage in the commercial office market that will dwarf the carnage of retail”. Wall Street’s spectacular physical topography, then, may be all that remains.
“Companies have been paying exorbitant rates for someone to eat their crisps, drink the coffee and use the company gym. Given what’s going on in the world in every respect, I’m not sure that’s something that can continue.”