NYC Schools Headed Toward Shutdown, Teachers Union Head Says

Even though New York City schools have been a haven from the coronavirus with infection rates well below 1%, a surge in cases in the city threatens to transform them into centers of transmission, the head of the teachers’ union warned.

Michael Mulgrew, president of the United Federation of Teachers, said Mayor Bill de Blasio is right to insist on a shutdown if there’s a citywide 3% weekly rate of positive Covid-19 infection, up from 2.6% now.

“The virus will infiltrate the schools and then, instead of an outbreak in one or two neighborhoods, the schools will be the connection point to all the city’s neighborhoods,” Mulgrew said in an interview.

The largest U.S. system began a mix of in-class and remote instruction in September. Daily disinfection, all-day mask-wearing and social-distancing rules make schools as safe as hospitals, Mulgrew said.

De Blasio said Thursday that officials are prepared to shut down the schools the day after the rate hits 3%. They would reopen as soon as epidemiologists felt confident the city could hold the rate below the threshold, he said. Mulgrew said a shutdown appears increasingly likely.

“With the numbers of going up the way they have the last seven days, I feel it’s going up to 3%,” he said.

Going Dark

Public health and school officials settled on the trigger rate for a shutdown last summer, de Blasio said Thursday. The city reported a 2.60% positive rate as of Tuesday, an increase from 1.88% on Nov. 1. Its seven-day average of new cases has jumped to 870 from 605 in that span. The city is especially vulnerable to the highly contagious virus due to its population density and reliance on mass transit.

The heightened infection rate is happening as parents face a Sunday deadline to decide whether to enroll their children in the city’s hybrid program or keep them at home full-time for instruction online.

Even though New York’s infection rates are lower than in most areas of the U.S., the trend is going up. On Wednesday, Governor Andrew Cuomo ordered all bars and restaurants with state liquor licenses to close at 10 p.m. along with gyms. Indoor gatherings must be limited to 10 people. The rules, which begin Friday, came as cases jumped to the highest level since April.

New York state saw nearly 10,000 new coronavirus cases over two days, as Cuomo urged people to “buckle down.”

Of the more than 162,600 tests conducted across the state Wednesday, almost 3% were positive, according to state data.

— With assistance by Keshia Clukey

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Suddenly, Manhattan rent is (relatively) cheap

  • The median rent in Manhattan plummeted 11% to $3,036 last month — the lowest its been since 2013.
  • The lower rents, accompanied by a number of concessions, are a result of record-high apartment vacancies, according to a report from Miller Samuel and Douglas Elliman.
  • Almost 16,000 apartments sat empty in September, as the New York City exodus seemingly carries on amid the coronavirus pandemic.
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Thousands upon thousands of Manhattan apartments are just sitting empty right now.

And the mounting number of vacancies are forcing landlords to bring rents down to the lowest they've been since 2013.

A new analysis by Miller Samuel and Douglas Elliman found that the number of Manhattan apartment listings skyrocketed last month, Bloomberg reported. Almost 16,000 apartments sat vacant — the most since 2006, when these records started being kept. 

This time last year, roughly 5,300 apartments were vacant. The vacancy rate in Manhattan currently hovers around 6%, when typically, in non-pandemic times, it would fall somewhere between 2% and 3%.

The record-high vacancy rate feeds into a pandemic-fueled narrative about New York being "dead."

Jonathan Miller, the CEO of Miller Samuel, previously told Business Insider that some Manhattan residents left back in March and April, and currently have no "incentive to return."

Fewer and fewer people are willing to pay Manhattan rent while schools and offices remained closed and cultural options stay limited, especially when they could achieve a higher level of comfort virtually anywhere else.

To convince potential renters, most landlords offered a number of concessions last month. The report found that 55% of all leases signed in September included concessions, whether it be a Citi Bike membership or multiple rent-free months.

All in all, the borough's median rent plummeted 11% to $3,036 in September. The drop represents the lowest median rent in Manhattan in seven years.

Depending on how you look at it, now might be the time to rent in Manhattan, where rentals make up two-thirds of apartments in the market — or it could be the time buy elsewhere, which many are seemingly doing.

Miller also told Business Insider that he imagines Manhattan's apartment vacancy numbers will continue to rise until there is a vaccine.

The tri-state suburbs, meanwhile, have become a land of bidding wars. 

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Empty rental apartments in Manhattan triple, nearly hitting 16,000

  • The number of apartments for rent in Manhattan tripled in September, with nearly 16,000 apartments sitting empty, according to data from Douglas Elliman and Miller Samuel.
  • The vacancy rate in Manhattan, which is typically 2% to 3%, is now just under 6%.
  • The median net effective rents — those that include concessions — fell by 11% to $3,036.

The number of apartments for rent in Manhattan tripled in September, with nearly 16,000 apartments sitting empty, according to a new report.

There were 15,963 apartments for rent in September, up from 5,299 a year earlier, according to data from Douglas Elliman and Miller Samuel. The vacancy rate in Manhattan, which is typically 2% to 3%, is now nearly6%.

With the glut of empty apartments, landlords are being forced to offer ever-higher incentives and ever-lower rents to entice tenants. Listing discounts have tripled, to 4.5%, and landlords are offering an average of two months rent to new tenants. 

Prices are also dropping. The median net effective rents — those that include concessions — fell by 11% to $3,036. The big question for New York City, which is facing a population decline, higher crime rates and high unemployment, is whether prices can fall enough to lure residents back to the city. 

"I don't think we're there yet," said Steven James, president and CEO of Douglas Elliman's New York City brokerage. "I think we have a little ways to go. The consumer knows the landlords are on the ropes and they know they've got them."

Manhattan rents remain high by national standards. The average rent for a one-bedroom in September was $3,307, while rents for a two-bedroom average $4,817. The low end of the market has been hit especially hard, since lower-paid workers in service industries and restaurants have borne the brunt of the economic pain in New York. Rents for studio apartments have fallen by 14%. 

Rentals account for two-thirds of the apartments in Manhattan, which is the largest rental market in the country. As rents fall, and more apartments sit empty, the pain could begin to cascade down to smaller, less capitalized landlords and to mortgage lenders and banks. It could also start to impact property tax revenue — which is the largest source of revenue for New York City — as landlords don't have rental income to pay their taxes.

"The chain reaction is going to be difficult, especially for newer landlords that haven't been through something like this before," James said.

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Westchester Home Prices Pushed to Record High By Bidding Wars

Home prices in Westchester County surged to a record in the third quarter as bidders from New York City battled for a chance to buy a suburban retreat.

The median price of single-family homes that changed hands in the quarter jumped 16% from a year earlier to $808,500, the highest in data going back to 1986, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

Open houses have drawn crowds, and multiple offers on the same day, largely from city-dwellers seeking space for a prolonged period of working from home throughout the Covid-19 pandemic. Their purchases nearly cleared the market of listings, which tumbled 30% from a year earlier.

“We’re all preparing for what could be a second wave of spiking cases,” Douglas Elliman President Scott Durkin said in an interview. “Everyone is positioning themselves to have options.”

A recent open house in New Rochelle had 21 potential buyers lined up outside, and drew as many as six offers, according to Durkin. The demand is largely coming from Manhattan and Brooklyn residents who are maintaining their apartments in the city, but seeking a “primary second home” for extra space.

The average size of homes that sold in the quarter was the largest in 30 years at 2,937 square feet, according to Jonathan Miller, president of Miller Samuel.

Buyers have been “looking for amenities,” said Liz Nunan, chief executive officer of brokerage Houlihan Lawrence, which tracks what buyers prioritize when browsing listings.

“We noticed spikes in searches for things like pools and tennis courts and mountain views,” she said.

Demand for Westchester homes doesn’t appear to be abating.

Purchases pending as of Sept. 30 soared 71% from a year earlier, Houlihan Lawrence said in its report on the market. Contracts jumped even in the most rarefied price categories: Deals at $3 million to $3.99 million doubled, and those priced at $4 million or more increased 15%.

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NYC Downgraded as Moody’s Warns of Longer Return to Normal

The coronavirus pandemic has cost New York City its Aa1 credit rating, the second highest awarded by Moody’s Investors Service.

The city’s general obligation bond rating was cut one notch to Aa2 from Aa1, according to a release from the company. The downgrade impacts $38.7 billion of general obligation bonds. Moody’s also lowered the city’s $4.5 billion of appropriation backed debt by one level to Aa3 from Aa2.

“The downgrade reflects the substantial financial challenges New York City faces caused by the economic response to the coronavirus pandemic and our expectation that New York City is on a longer recovery path than most other major cities,” Nicholas Samuels, a lead analyst at Moody’s, said in a credit ratings report on Thursday.

Moody’s kept its negative outlook on the city’s debt, signaling another downgrade is possible. This “reflects ongoing uncertainty about how long the pandemic’s economic consequences will impact the city’s economy and budget, including the return of office workers, business and leisure travel and real estate markets,” Moody’s said. “The outlook also reflects our opinion that the city cannot shift to a ‘back to normal’ economy until a vaccine is widely available.”

New York City is planning to sell $1.1 billion of tax-exempt, fixed-rate general obligation bonds Oct. 7 to fund capital projects and convert some floating-rate debt to fixed, the city said in a news release.

Mayor Bill de Blasio has said the city may be forced to cut 22,000 jobs. It has asked the state for authority to borrow $5 billion to pay operating expenses over the next two years, but Governor Andrew Cuomo opposes the move.

While the public health response to the pandemic lowered the city’s infection rate, the lasting economic consequences “will likely be amongst the most severe in the nation and require significant fiscal adjustments,” Moody’s said. The city faces additional fiscal pressure from potential actions the state of New York may take to balance its own budget and assist the finances of the Metropolitan Transportation Authority, according to the ratings company.

“I am not surprised,” said Eric Friedland, director of municipal research at Lord Abbett & Co LLC. He said he doesn’t expect multi-notch downgrades for the city given that economic activity is showing signs of recovery, spending cuts are available and New York’s largest revenue source is property taxes, which are less volatile in a downturn than sales taxes.

“Home prices and sales in outer boroughs are holding up compared to Manhattan, and the City is able to draw upon a good level of reserves to help achieve balance,” he said.

New York City’s unemployment rate reached 20.4% in June and was 16.3% in August. Revenue in the city’s $88.2 billion budget is $7.1 billion lower than projected in January.

The spread between New York City’s 10-year general obligation bonds compared to AAA rated debt widened to as much as 0.7 percentage point in May from 0.12 percentage point at the beginning of March, according to data compiled by Bloomberg. The yield premium is currently 0.55 percentage point.

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