Hope In 'The Emptiness Of It All': How Midtown Could Reinvent Itself After COVID

Midtown — the epicenter of Manhattan office, retail and hospitality — has seen a stark transformation over the past eight months. The hundreds of thousands of office workers and tourists who used to fill the streets and businesses every day now only trickle down the hallowed corridors of Fifth Avenue, Park Avenue, Madison Avenue and Broadway.

Dozens of boutiques, showrooms and restaurants that paid millions in rent every year have already shuttered in the world’s priciest retail cluster. It will be months before the financial giants, law firms and advertising behemoths that made Midtown office buildings the most valuable real estate in the country tell their workers to come back.

“For the most part in the city, it’s really Midtown that hasn’t recovered yet,” GFP Real Estate Chairman and principal Jeffrey Gural said in an interview Monday. “If you look around, there are parts of the city that are not as empty, it’s really Midtown that is empty.”

Midtown’s identity hinges on the tenets of society that have been shaken over the past eight months. As the world’s largest office district, it has been hard hit by the sudden shift to working from home. Its retailers, which were propped up by the enormous amount of daily foot traffic its expensive streets received, are bearing the brunt of a steep decline in tourism coupled with the acceleration of the consumer shift to e-commerce. With the loss of business and leisure travelers, many of its hotels have decided to keep their doors closed until the end of the crisis, while  others have folded permanently.

Many are hopeful that a vaccine or treatment for the coronavirus will be able to turn things around. But a vaccine will be only the beginning of the area’s recovery.

Starting in the spring or summer, Midtown will need to market itself to a new world on the other side of the crisis, one in which the way people work, shop and travel — which more people have done in Midtown than anywhere else in the U.S. for years — could be changed forever.

“The recovery of Midtown certainly is a challenge, one of the biggest challenges for New York’s recovery,” said Ethan Kent, executive director of PlacemakingX, a New York-based global public space planning and development nonprofit. 

A reinvented Midtown could have less car congestion along major streets, expanded outdoor public space, microbreweries or mini-logistics delivery centers where retail storefronts used to be, affordable housing in buildings that are currently hotels and amenitized office spaces with outdoor fire pits to lure in employers that now have the option of keeping their staff working from home, a variety of land use experts, public space advocates, market researchers and property owners told Bisnow over the past two weeks. 

“I think there is both an interior space question and then a new development question,” said urban planner Mitch Korbey, partner and chair of the Land Use & Zoning Group at Herrick Feinstein. “Those two things have to come together. … I think there will be a premium and emphasis on open space.” 

When approaching new development and reimagined use of space in Midtown in the future, the city needs to incentivize the rethinking of interior architecture, underground space, pedestrian flow and public urban plazas in order to ensure a future where the city keeps pace with peers of its size and influence on the global stage, he said. 

“We need to recognize that our city needs to be competitive with other cities,” Korbey said. “We have to be able to compare ourselves to cities in China, in Japan … to cities like London.” 

The pandemic may have opened a door to create positive evolution in Midtown, but it could close soon after the pandemic ends as well, Kent said. 

“We have to think of the emptiness of it all as an opportunity to allow people to use their creativity to reinvent this, there’s a short window to this,” he said. “It’s sort of a race, in a way, to create places that bring people, not tourists, but locals back into the area.”

A Season To Forget

The holiday season has descended, but time in Midtown seems like it stopped in March when New York first shut down. Around Rockefeller Center, Silver Bells and other holiday classics are piped in through a speaker. The echoes of the song bounce off Fifth Avenue, which would typically be filled with the sounds of tourists, locals and office workers looking to find the perfect gift in time for the holidays or take selfies in front of one of New York’s iconic emblems.

An estimated 125 million people typically pile in to see the Christmas Tree at Rockefeller Center each year. The plaza on 50th Street between Fifth and Sixth avenues overlooking the tree and rink is usually so packed this time of year that it’s nearly impossible for a tree-watcher not to bump shoulders with the stranger grabbing a photo of the tree beside them. 

This year, in the evenings when the tree is at its most brilliant, it’s easy to maintain more than the 6 feet of distance between the spectators.

While retailers like Forever 21 in Times Square or the American Girl Store at 75 Rockefeller Plaza have been open since June, the quintessential New York City experience in Midtown stands still. Scores of posters for Broadway musicals, movies and TV shows advertising premiere dates for spring and summer 2020 still adorn the marquees and billboards of Times Square, frozen in time. The buzz from the throngs of people, taxis and performers has been replaced by piped-in holiday music.

The buildings that house the traditional Midtown tourist and office hubs are still standing, but the reality of the space is different. On sunny days this fall, key landmarks such as Grand Central Terminal, Bryant Park and St. Patrick’s Cathedral host a fraction of their usual barrage of office workers and tourists elbowing each other to try and get to the next experience or meeting. On rainy days, one of the world’s biggest urban attractions feels like a ghost town

Hotels in the area, which were beneficiaries of the city’s over 65 million tourists and millions more business travelers annually, have taken the hardest immediate hit. The Roosevelt Hotel, The Times Square Hilton and the Courtyard by Marriot in Herald Square have closed their doors permanently, and an estimated 20% of hotel rooms citywide are predicted to never reopen.

Meanwhile, swaths of retailers are filing for bankruptcy as retail rents along the area’s priciest strips plummet.

Beyond the tourist-driven business, the Midtown that was the world’s foremost office district has taken a punch to the chin. In the third quarter of this year, Midtown office tenants added 9M SF of sublease space to the market, more than those in Midtown South and Lower Manhattan, according to Savills. 

Next to the skyscraper-dominated heart of Midtown, on side streets in neighborhoods like Murray Hill, Koreatown, Hell’s Kitchen and the Flatiron District, outdoor restaurants were some of the few rays of light. This summer, when outdoor dining began, restaurants showed their personalities, furnishing their new Parisian setups with in-season blooms from local florists. Into the unseasonably warm autumn, some Midtown restaurants had to turn customers away because waitlists for their outdoor tables were too long. 

These same restaurants have built huts and igloos, decorated with evergreens and sleigh bells, with signs boasting their heated seating and holiday menus. Their creativity has inspired hope for the recovery ahead.

“Outdoor dining is really compelling," L&L Holding Co. Managing Director David Orowitz said. ”It brings people out, so COVID or not, that is here to stay.” 

The pandemic has sped up everything from the work-from-home movement to the so-called death of retail to pain in an already oversupplied hotel market, sources say. 

“COVID has really just exacerbated existing trends,” real estate advisory firm HR&A Advisors principal Sulin Carling said. 

While companies are expected to come back to the office eventually, it will be different. Nearly 1 of every 5 workers can work completely remotely, a report from the World Economic Forum released this week shows, and after the pandemic, work-from-home is set to continue, most likely in a hybrid way, with most workers spending two to three days in the office.

Some 38% of 800 corporate leaders in a McKinsey & Co. survey said they are planning on decreasing the number of required days in the office by one or two, the World Economic Forum report showed. Another 19% said they planned on decreasing the number of required days in the office to three or more. Even when office workers do come back, Midtown’s daily crush of office-related traffic could never recover its pre-pandemic form.

Office will not be the only asset class permanently changed. With tourism not set to rebound to pre-pandemic rates until 2025, hotels face a long recovery ahead of them. Brick-and-mortar retail, which has been a cash cow in Midtown, seems to be in a state of permanent decline. 

In order to survive in a new world, the No. 1 office market in the country must evolve if it hopes to maintain its crown.

‘A Wonderful Canvas’ For A Post-Pandemic New York

Urban planners, when asked what a reinvented Midtown should look like, imagine a place where side streets are filled less with cars and more with colorful café seating, where a microbrewery sits on Fifth Avenue next to a logistics center where cyclists pick up e-commerce packages for delivery, where shuttered hotels are turned into affordable housing and an elevated green streetscape runs over Park Avenue.  

To more immediately address the area’s issues of vitality, office landlords need to infuse hospitality into their offices and amenitize their spaces to attract tenants and prove to employers that the office can provide something that working from home just can’t, Marx Realty CEO Craig Deitelzweig said. Marx owns the 430K SF office and retail building at 10 Grand Central and the 130K SF office building at 545 Madison Ave.

Deitelzweig paints a picture of an office building where plants and greenery overflow into public areas and plazas, making the area warm and inviting for workers to come to every day. In one of his buildings, he installed a fire pit on a terrace that he said is incredibly popular among the workers who are still coming in.

“Unfortunately some of the public space that has come to the market recently has been kind of sterile,” he said. “I think people now more than ever are looking to provide warmth to their environment ... the Central Parks of the world, the Bryant Parks of the world, that’s the kind of environment people are looking for.”

While he believes that Midtown will come back strong because of its transportation hubs in Grand Central and Penn Station, he also thinks office landlords who don’t adjust to a new reality will slip through the cracks. 

“I do think there are haves and have-nots,” he said. “And the buildings that are not adapting will have to go back to their lenders.”

Deitelzweig also believes that the rollback on regulations for outdoor dining is an opportunity to elevate the city to new heights. 

“I think this winter, New York City has the opportunity to look like Aspen,” he said.

Winston Fisher, partner at Fisher Brothers — which owns Midtown office buildings such as 1345 Sixth Ave., Park Avenue Plaza and 299 Park Ave. —  said Midtown could differentiate itself globally as an art-infused office district by investing in public art and community infrastructure, which his company had already done pre-pandemic. 

“Now more than ever, we’ve wanted to help Midtown be attractive for all types of tenants,”  Fisher said. “I think New York is a wonderful city and I think people are going to come back, but we do need some creativity … I think that Midtown is a wonderful canvas for these types of experiences to happen.” 

Fisher Brothers hosted a movement art performance in the lobby of one of its buildings, something that drew interest from its tenants, Fisher said. In 2018, Fisher Brothers hosted a competition that solicited designers for plans for an elevated public walkway and greenscape over Park Avenue in Midtown. The developer dubbed the proposal “Center Line,” an homage to the West Side’s High Line. The proposals envisioned a basketball court, waterfall and cubic art exhibit, according to Dezeen.  

Out of the 150 entries the competition received from urban planners, students and others, 17 were shortlisted. 

Fisher said he hopes the city takes up and funds the winning idea post-pandemic, because the convergence of public art and Midtown’s work culture could help ensure its comeback. 

“You want to show employees you can work from home, but the office can be even more exciting … you want to make it fun and interesting,” he said. “We could lean again deep into the art community to create increasing streetscapes.” 

Rockefeller Group, which owns 1271 and 1221 Sixth Ave. across the street from Rockefeller Center, is also looking to renovate its office spaces to bring them into a new work era for Midtown. 

“Work-from-home, in some form or fashion, is here to stay,” Rockefeller Group Executive Vice President for Core Holdings Bill Edwards said. “For us, we’re trying to take the approach of how we’d identify places we can amentitize the space so that it makes it a more difficult decision to work from home.”

The developer said that it was finishing up renovations at 1271 Sixth and scoping out where it could add more amenities to its buildings. With a retail vacancy at 1221 Sixth, the developer is looking to pivot the space for public use. 

“Part of that project is to create that public space,” Edwards said. “The question we ask is how to activate that space for the public, especially the renovation of that plaza.” 

Public space is a key element of the future of the area. This was in part propelled by the burgeoning and popular outdoor dining scene, said Kent, the urban planner.

The public fervor for this kind of public space creates a unique opportunity for the city and stakeholders, he said. 

“There’s an opportunity to bring locals to a few key places, there are people who want to connect with the heart of their city,” Kent said.

Kent said the city should restrict the number of cars on the widest streets in Midtown so that street vendors and restaurants could serve pedestrians better and bikers could more safely get around the area. 

He suggested capping traffic to a maximum of two lanes along avenues in Midtown and removing parking. The city could also create expanded protected bike lanes as well as commercial drop-off zones, he said. Urban planners at the Regional Plan Association have proposed a plan that would create 425 miles of protected bike lanes throughout the city. 

Kent also believes that these public spaces will help attract workers back to the city, he said. 

“The future of work is increasingly in shared space,” he said. 

As for retail, HR&A Advisors’ Carling, who previously worked for the City Planning Commission, said Midtown’s future ground floors should more closely mirror the consumer demands of the day. 

Enormous retail spaces could be repositioned into micro-distribution centers or hubs, such as an Amazon locker, where delivery associates on bikes could pick up packages to deliver across the city. Makerspaces — such as microbreweries, apparel manufacturing and other small mixed-use manufacturers  — could take up ground-floor retail where big-box retailers currently are. Ghost kitchens are also likely to proliferate. 

“I think it’s going to require, on the landlord's side, some creativity around how we fill those spaces,” Carling said. “The other half of the equation will be put around centralized planning.”

The city could rezone the area so that apartments would line side streets instead of ground-floor retail, she said. 

Landlords will have to pivot and adjust prices to meet the new reality for retail, Rudin Management Co. Chairman and CEO Bill Rudin said. 

“Owners are going to have to be realistic about what the value is in these spaces, work with the tenant or be aggressive to attract new tenants,” he said. 

While tourists will return to hotels, the hospitality market will be a lot different. Hotels need to make people feel safe again, LW Hospitality Advisors President and CEO Daniel Lesser said. This may include new technology such as touchless check-ins and other ways to mitigate the spread of germs. 

The hotel market in the area was already oversupplied before the pandemic, so an obliteration of demand entirely has put the final nail in the coffin for many. An estimated 20% of the city’s hotel rooms won’t reopen, which would leave a lot of empty space throughout Midtown. 

Beyond increased public space, repositioning, redevelopment and creative office renovations, the future of Midtown relies most heavily on New York City’s economy on the whole. The city needs federal assistance to close budget holes and continue its quality of life to retain and attract residents, the lifeblood of the city, experts said. 

“Manhattan is an island, and Midtown is part of that island,” Lesser said. “If the rest of the island doesn’t come back, I don’t know how Midtown does.”