Tall buildings, dependent on elevators, have become precarious investments.

A few weeks ago, James Altucher published a provocative essay titled NYC is dead forever. Here’s why. Since then, it has been reprinted in the New York Post.

Foretelling the future is perilous. And the word forever should be used sparingly. Nevertheless, Altucher’s essay contains important insights. Its big picture argument is that the COVID-19 pandemic will leave a profound mark on large cities.

A thoroughly vetted vaccine is years away. Affordable, readily available, instant-read COVID tests don’t appear to be on the near horizon. Barring other game changers, businesses that own or lease office space in skyscrapers are in a world of pain. Why? Elevators.

Social distancing isn’t possible in an elevator. Stepping into one along with a dozen strangers makes no sense if we’re compelled to stand six feet apart at the supermarket cash register.

Some companies currently have only a portion of their staff back at the office, in order to accommodate social distancing. But getting up to the office (and down again, at the end of the day) has become a nightmare. In early June, the CEO of Nielson Company, a market research firm with headquarters in a Manhattan skyscraper, told PBS his employees “would be in line for over four hours to use the elevator up and use the elevator down” if everyone were to physically return to work.

Imagine a scenario in which three people are allowed to be in an elevator at the same time. Three individuals step into it on the 21st floor. On the way down, the elevator stops at the 19th floor. The door opens, but no one can come aboard. The door closes. A few seconds later, the elevator stops at the 15th floor. The door opens. But no one can come aboard. The door closes. This happens on the 12th floor, the 7th floor, and the 5th floor. By the time those three individuals reach ground level they’re entirely persuaded that working from home is the superior option.

15-20% of commercial leases expire each year. How keen will companies be to renew this year? Or next? A great deal of expensive office space in prestigious office towers in New York, Chicago, Boston, Dallas, Seattle, Los Angeles, Toronto, London, Sydney, and Melbourne has suddenly become less attractive.

This isn’t a great time to own certain kinds of residential real estate, either. Even before the pandemic, it could take 15 minutes to get to ground level first thing in the morning in tall apartment buildings and condo developments. Add in fear of catching a deadly virus, and elevators are now things to be avoided.

Expect people with other options to continue fleeing those buildings. If even one in ten do so, the marketplace will shift noticeably (on the positive side, rents will fall). Expect Airbnb units above the third floor to be in even less demand.

Altucher points out that large numbers of people left big cities for smaller communities back in March, expecting to return soon. Numerous others stopped commuting into the downtown core for work. By now, they’ve arranged their lives differently. They’re in a new groove.

Do they miss their former life, the one that included restaurants, bars, and music concerts? Yes. But they aren’t pining for crowded and grimy public transit, complete with loud and sometimes violent mentally ill fellow passengers. They aren’t missing the hour-long commute in each direction, whether behind the wheel on a choked freeway or packed into a local train. They aren’t missing $500-a-month downtown parking fees.

Relieved that they and their children aren’t near the riots, the looting, and the skyrocketing gun crime, many of these people won’t be keen to disrupt their lives yet again.

In the longer term, big cities will likely bounce back, regaining their energy and reinventing themselves. But this is a moment in which many restaurants have decided to permanently close their doors – as have many small retailers. This is a moment in which politicians continue to propose tax hikes in locales that have less to offer than they did six months ago.

This is a moment in which city dwellers have come to fear and dread elevators.

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LINKS:

• ‘NYC is dead forever’ originally appeared here. Read it at the New York Post here.
• Comedian Jerry Seinfeld responded hostilely in the New York Times. Altucher has now responded to Seinfeld.
• PBS, American skyscrapers face an uncertain future amid coronavirus
• CNN, New York City rents slide as vacancies hit a record
• Business Times, London’s financial district looking like ‘ghost town’ as workers stay away
• GlobalNews, Toronto rental market turned upside down by coronavirus pandemic, hands power to tenants