JPMorgan Chase is spending an estimated $three billion to erect a new headquarters skyscraper at 270 Park Ave. However in line with a prime analyst within the financial institution’s personal asset and wealth administration division, firms ought to assume twice about investing an excessive amount of in New York Metropolis.
The Large Apple ranks behind 18 different US cities — together with such second-tier markets as Boston, Seattle and even lowly Boise, Idaho — in a bombshell “forensic evaluation” of the cities’ financial and actual property prospects by Michael Cembalest, chairman of market and funding technique for JPMorgan Asset & Wealth Administration.
New York bested solely shooting-gallery Chicago, depressed Detroit and empty-offices capital San Francisco in an combination rating of the cities’ post-COVID 19 situations — similar to power of downtown restoration, workplace emptiness, family tax charges, out-migration, violent crime and municipal fiscal well being.
Cembalest — a local New Yorker who’s written his division’s “Eye on the Market” experiences since 2005 — did the examine on the request of a consumer CEO.
He beneficial that his shoppers deal with New York “the best way an asset supervisor would possibly deal with a megacap inventory in a diversified portfolio … the dangers argue towards an excessive amount of focus for company or actual property entities.”
He cites Gotham’s “distinctive benefits” of its total measurement, business-sector diversification, world financial-sector dominance, complete employment and decrease critical crime price than in different cities (“which generally comes as a shock.”)
Regardless of these strengths, New York Metropolis “is dragged down by a weak financial restoration since 2019, structural issues associated to its enterprise situations and poor fiscal well being.”
He particularly notes:
- Present mass-transit use at 73% of 2019 ranges is “unsustainable given required capital and working prices.”
- Workplace emptiness of 18% is the best for the reason that early 1990s.
- Workplace to residential conversions “are unlikely to materially cut back the inventory of underutilized workplace house given value and complexity.”
- “Zoning restrictions are notably burdensome at a time when flexibility is paramount in a post-COVID world.”
- “The asylum inflow threatens to considerably impair town’s monetary scenario” at a time when it must considerably re-invest” in infrastructure and housing.
Requested whether or not the financial institution had any regrets about how a lot it’s spending on its new headquarters in mild of Cembalest’s findings, JPMorgan spokesman Michael Fusco mentioned:
“New York Metropolis has been our house for greater than 200 years and we contribute considerably to the native economic system as one of many metropolis’s largest employers. We’re constructing for future generations of staff and making a long-term funding in New York.”