Archive for the ‘New York’ Category

Putting a Positive Spin On It – Or At Least Trying to Do So

Monday, June 15th, 2009
The New Direction of the Financial District

The New Direction of the Financial District

The Alliance for Downtown New York hosted the Small Business Community Expo, a networking event for small business owners, advocates and service providers. Alliance president Liz Berger stated that “people are really pushed and empowered by the current economy to try things they haven’t tried before. They’re hungry for knowledge and they want to know that they’re not out there by themselves.” It often feels that way. Wall Street has lost nearly 20,000 jobs since August 2008, according to the New York State Department of Labor. And Wall Street isn’t the only Manhattan industry that is downsizing; the media and fashion industries are also in trouble. But in Lower Manhattan, where rebuilding the World Trade Center site is moving at a glacial pace, it is small consolation to know that it isn’t just the financial district that is experiencing the economic pain. However, the Alliance for Downtown New York points out that that despite Lower Manhattan’s reputation as an extension of Wall Street, less than a third of jobs in the area are finance-related, and a growing number of them are in the creative and nonprofit industries. In addition, they say, the residential population of Lower Manhattan grew 11% last year, to 53,900, and is forecast to reach 60,000 by 2011. The growth of the residential population in an area that used to go dark at 7:00 p.m. as financial district workers left for home creates an opportunity for small businesses to provide retail services that the residents will demand, so says the Alliance.

I am all for an optimistic outlook on life, so I applaud the brave efforts of the Alliance to try to do something for economic development by reaching out to small businesses. But there is no way that this development can be interpreted as anything by the sad consequence of disastrous government policies. Lower Manhattan has become a miserable place to live, I know. The round-the-clock and unpredictable disruptions around rebuilding the World Trade Center site, orchestrated for nearly one decade by those who don’t have to live in the area, has taken its toll on the community. The encouragement to offer new retail services to new residents is a bit misleading; while the residential population has increased, it has not done so at a rate sufficient to offset the decline in employees in the area, employees who sustained restaurant and other retail businesses. I have watched as neighborhood fixtures like Foxhounds go out of business because the loss of 20,000 jobs in Wall Street following the loss of 50,000 workers based at the World Trade Center basically wiped out their luncheon business and the new residents are not dining out enough to offset that loss.

And you wonder how long the new residents will stick around. Many of the residential apartments were conversions motivated not by market demand but by incentives, such as Liberty Bonds, offered to real estate developers. One such result is the conversion of 180 Maiden Lane, which used to be the office of Cadwalader, Wickersham & Taft, a Wall Street law firm. I toured the apartments with a broker; they had all the charm of a law clerk’s cubicle. You could almost imagine Bartleby the Scrivener hunched over his desk here. The real estate developers apparently were unwilling to spend the money required to do a complete gut renovation and change the bones of the building to make the place feel like home. Still, the interior is less depressing than stepping outside and looking at all of the half-finished construction projects, stalled for lack of financing. These projects were not motivated by market demand; they were a response to corporate welfare offered by post-9/11 reconstruction plans of the government.  Small wonder that many of the journalists who work for the Wall Street Journal are looking forward to leaving the World Financial Center and moving to 1211 Avenue of the Americas in mid-town Manhattan. My friends who continue to work in the neighborhood describe it as a “ghost town”.

What is so sad is that the events of 9/11 notwithstanding, Lower Manhattan was a vibrant community of economically productive small businesses. When government policy decided to distort market mechanisms for supply and demand, we were displaced to make way for boondoggle real estate projects that were dependent of subsidies and ultimately, were not sustainable. Many of the new residents of Lower Manhattan chose to live there, despite the poor quality of life, for its proximity to work and the incentives offered to sign apartment leases. Basically, you had to bribe people to live there. But when Merrill Lynch, AIG and others got into trouble, residents lost their employment and until they find new work, they cannot afford to move. But rest assured that once they find new jobs, they will. Even if a few new restaurants and shops appear to serve this transient residential population, these are low-margin businesses that don’t generate the kinds of returns to replace the employment and tax base supported by the commercial businesses that were driven out. If you doubt me, go to the Tiffany’s shop on Wall Street at lunch hour and observe that there is not a single customer there. The market would have adjusted supply and demand for commercial real estate in the aftermath of 9/11 by the mechanism of price. Offering corporate welfare to wealthy real estate developers allowed them to continue to benefit from a real estate bubble that should have burst a bit earlier. But the distortions effectively destroyed a community. Only now are politicians and various business improvement district groups recognizing the importance of local small businesses – now that we are gone.

Protecting New York City From the Sea

Sunday, May 31st, 2009
New York City Sea Barriers

New York City Sea Barriers

I had the opportunity to tour the emergency response center of New York City’ s Office of Emergency Management.  Officials there told me that one of their greatest concerns was the threat of a major hurricane striking the city. Indeed, National Hurricane Center Director Max Mayfield testified before Congress “it is not a question of if a major hurricane will strike the New York area, but when.” A hurricane would flood Wall Street, the financial district, densely packed neighborhoods and the City’s infrastructure, which is largely underground, such as the subway. So I was very interested to learn of a conference held in advance of the new hurricane season (which starts on Monday) in which innovative solutions for New York were presented.

Some engineers are proposing the construction of a barrier to block the sea surges and protect areas vulnerable to flooding.  One idea involves the construction of a barrier between New Jersey and Queens, some five miles long, which would rise out of the water to meet storm surges.  It may sound extreme, but if New York were to experience a repeat of the hurricane that struck Long Island in 1938, the storm surge would be as high as 25 feet in parts of New York City. The result would be flooding of as many as 600,000 homes and an evacuation of three million New York residents. The economic losses would exceed $100 billion.  This makes the cost of the barriers, estimated to be $6 – $9 billion, appear to be a sensible investment.  Of course, at this time New York doesn’t have the finances for such an investment and seeking help from the federal government would not appear to be a prudent strategy. Surely every community would rightly demand the same protection.  For the time being, it make sense to prepare for flooding by moving critical infrastructure such as pumps to higher elevation areas. It also makes sense to launch a public awareness campaign. When I toured OEM’s command center, I learned that their leadership feared New York residents would enter subway stations on a storm alert – the last place you want to be when a hurricane or flood is forecast.

At Least They Told Us This Time

Sunday, May 17th, 2009

The largest disaster drill since September 11, 2001 at the World Trade Center site took place this morning. New York City officials staged a mock explosion on a PATH commuter rail train in the tunnel linking Lower Manhattan, at the World Trade Center terminus, to northern New Jersey. Hundreds of police officers, firefighters and Port Authority of New York and New Jersey officials participated, along with 150 volunteers who pretended to be victims of the explosion. City officials advised downtown residents in advance of this drill. PATH rail service was suspended Sunday morning until the drill was completed.

A Disaster We Inflicted On Ourselves

Tuesday, April 28th, 2009
September 27, 2001 Re-Opening

September 27, 2001 Re-Opening

I recently blogged about my interview with Associated Press Business Reporter Joyce Rosenberg. We agreed that the current Wall Street crisis is, in many ways, a greater threat to the vitality of Lower Manhattan small businesses than the consequences of 9-11. I took a photograph of an empty subway train at the Wall Street stop to accompany that blog entry and happened to notice that it is almost identical to the photograph I had taken in an empty subway train at the same stop. My attorney happened to remark to me that the financial district is like a ghost town these days. But I noticed another similarity.

Attached are two photographs I took on September 27, 2001 of Mangia, which is a chain of sandwich and lunch restaurants in New York City. This particular one is located on Wall Street and it is where one of my business school class mates, Alex Krutov, often meet for lunch. I mentioned Alex in the first edition of my book as he was on his way to meet me in my Wall Street office from his home in Brooklyn on the morning of 9-11-01. After I made it safely out of the World Trade Center, I attempted to reach Alex by mobile phone to tell him what had happened and urge him to turn around and leave the area. Anyway, we were evacuated on September 11, 2001 and allowed to re-open in our office building one week to the day later. This is because of the symbolic importance attached to reopening the New York Stock Exchange. Had we been located even one block north or south, our reopening would have been delayed by many more months.

A Sad Occasion

A Sad Occasion

This photograph shows the reopening of Mangia on Wall Street on September 27, 2001. In the window, you can see a cake on which the icing announced “Welcome back”. The restaurant recently closed. Its business consisted of serving lunch to workers on Wall Street and the financial district and catering meetings at Wall Street firm. With the demise of several of the largest Wall Street firm, major layoffs among the surviving banks and reduced discretionary spending among those workers who remain employed, Mangia could not remain open for business. This is a restaurant that successfully recovered after 9-11.

Not Again!

Monday, April 27th, 2009
An Unwelcome Visitor

An Unwelcome Visitor

In Prepare for the Worst, Plan for the Best: Disaster Preparedness and Recovery for Small Businesses (John Wiley & Sons Inc., second edition, 2008), I wrote (page 190) that “the residents {of Lower Manhattan} who heard the planes crash into the towers were especially sensitive to loud noises. I remember being woken up at 3:30 a.m. one morning by a pair of F-16 planes overhead. As it turns out, the planes were not supposed to fly that route at that hour. The pilots presumably did not appreciate that the residents of Lower Manhattan were probably sleep-deprived and hyper-alert to such sounds. Having spent some time with small businesses on the Gulf Coast, I can tell you that they are going through exactly the same process.” Today, the White House organized a photo opportunity that consisted of a military aircraft chasing a civilian aircraft over the airspace of Lower Manhattan, directly in the vicinity of Ground Zero. You can imagine the reaction that was provoked by that abuse. The White House claims that New York City authorities were given advance notice of this planned exercise, presumably implying that local authorities were responsible for the anxiety that ensued. My colleague photographed the planes with his cell phone, which is the first photograph on this blog entry. The second photograph shows a group of Dow Jones employees, nearly all of whom worked in the World Financial Center on 9-11, outside their office building when a mandatory evacuation had been ordered.



The context of the quote from my book concerns the emotional reactions to disasters, sometimes years after the original event, which is something you have to anticipate. One of my colleagues said it best in an e-mail he sent to our group, so I will quote him directly “The fact that the White House could not be bothered to let the New York authorities know that there would be A FIGHTER JET CHASING A PLANE! AROUND LOWER MANHATTAN really makes me wonder who is keeping Gotham safe when something actually happens. I am sufficiently enraged that I will be communicating in ALL CAPS for the rest of the day.” So I think you get the point about emotions. Actually, all Americans should be angry about this, not just those of us in Lower Manhattan who were subject to more abuse. The White House has some explaining to do as to why taxpayer monies were spent on this “photo op”. Don’t we have an unemployment rate approaching 10%? Haven’t our as yet unborn grandchildren been sold as indentured servants to our foreign creditors? It is not like we have money to burn.