Navigating our way back to the Manhattan Hub


Navigating our way back to the Manhattan Hub

The Alliance had the honor of hosting Senior Fellow at the Manhattan Institute, Nicole Gelinas, as a guest speaker at our recent Alliance U. Nicole discussed how crucial it is for New York to get its people back and the possible solutions to do so.

For half a century, New York’s growth policy, stripped of some subtleties, has been as follows:

Step one: Build up a dense corporate office hub centered around 150 blocks of Midtown Manhattan. Step two: Improve transit, so that you can move these millions of commuters onto the island of Manhattan every day in crowded metal tubes, and then, at the end of the day, move them back out.

But because of the current state of the world, both steps are broken.

No one has any idea how New York’s and New Jersey’s transit systems can resume moving nearly 3 million people on and off a dense island by this fall. The answer won’t be more driving. A 30 percent drop in pre-COVID transit would mean a doubling of vehicles on Midtown’s streets — a total standstill.

Midtown is the nexus of a half-century old economic paradigm for three states making it crucial for the survival of NYC and its businesses.

  • Midtown, with more than 150k jobs per square mile, is the region’s densest concentration of wealth creation.
    • 41 percent of tri-state region’s nearly 3m office jobs are in Manhattan
    • Office jobs are 30 percent of the region’s jobs, but more than half of wages
    • Manhattan has 20 percent of city’s population, half its nearly 400k retail jobs

This is not the first time New York has undergone challenges that people feared it would not recover from. Because of possibilities of working remote and the ability to still get work done, more risks exist.

These risks include:

  • Mobility of high-priced labor, not just of capital
    • Elliott Management hedge fund announcing headquarters move from Manhattan to Palm Beach, October 2020
    • Creation of satellite offices to allow employees to avoid a locality’s tax liability
  • Replication of amenities elsewhere
    • Walkable cultural corridors outside of NYC. Is one theater (or museum) enough for most people, vs 43?
    • Online and on-demand in-person luxury shopping
  • Perceived long-term security risks in dense cities
    • Move toward gated communities as political and social risks of addressing crime grow

But the biggest risk to the Midtown model is desertion of transit:

Source: Presenter’s calculations based on New York Metropolitan Transportation Council data.

Subway ridership has plateaued at about 30 percent of normal. Commuter-rail ridership is worse:

This graph is from the New York City Comptroller’s office.


With people working remote and businesses opting to move their headquarters, what happens to all those offices sitting eerily empty? This is not a short-term problem. Even if we get a vaccine tomorrow, many commuters have found that they like staying home.

This does not mean forever but the level of flexibility to allow employees to work where they please.

With this challenge, possible solutions include:

  • “We’ll convert Midtown office buildings into housing”
    • Midtown Manhattan had oversupply of housing before the pandemic: 17.1 percent vacant units
    • New York City does not have a housing shortage. It has a subsidized housing shortage. Subsidized housing requires subsidy
    • Conversion into housing harms the value of Midtown’s four transit hubs: Grand Central Terminal, Penn Station, Port Authority Bus Terminal, and (soon) East Side Access
    • Midtown already is a live-work neighborhood, in that one-third of residents of nearby neighborhoods – or 70,000 people – walk to work

But the most realistic solutions include:

  • Approach transit and streetscapes with an amenity focus, not a utilitarian focus
  • Quality of life: carrot and stick with low-level street crimes
  • Sales-tax holidays (optimally federally funded)

… to make Midtown a place where people want to be, not where they have to be.

For the full recording of Nicole’s presentation, check out the following video:

For the Q&A portion of her presentation, watch the following video: