Crain's New York Business by crains-new-york-business

PIECE OF WORK? A gallery owner has a colorful history dealing with artists

ASKED & ANSWERED Out Leadership exec on equality in the workplace PAGE 11

CRAINSNEWYORK.COM

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JUNE 8, 2020

INSIDE

CORONAVIRUS ALERT FINANCIAL MESS Hospitals are racking up huge losses from Covid-19 care PAGE 2

NO ONE HOME Residential listings hit record low in April PAGE 3

BUILDER PIVOTS A maker of modular building materials starts constructing temporary hospitals PAGE 4

LONG ROAD BACK City’s finance jobs may not return for six years PAGE 7

GUNS WERE DRAWN A Crain’s 40 Under 40 honoree recounts a harrowing police encounter PAGE 8

HUNGRY FOR SPACE Demand for medical labs growing during pandemic PAGE 21

POLITICS

LOOTING MARS PROTESTS

SMASH AND GRAB While police grappled with civil rights protesters, vandals plundered businesses.

Business community grapples with losses, while upholding protest

BY GWEN EVERETT, NATALIE SACHMECHI AND BRIAN PASCUS

hen looters inflicted $25,000 worth of damage on her Fordham Road storefront, Diana Wooden said the police stood by and watched. “The NYPD was literally—when I say standing, there’s no need to exaggerate. They were not moving,” said Wooden, who co-owns Cross Way Driving School. The police huddled nearby, she said. “They pretty much told us, ‘You guys should have protected your own store before this happened,’” Wooden said. She and her family had put a sign in the store window before the June 1 ransacking: “This is a black and Dominican-owned business.”

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See LOOTING on page 18

NEWSPAPER

VOL. 36, NO. 21

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OUT OF OFFICE

WHO OWNS THE BLOCK

SPOTS TO ORDER SUSHI, GUMBO AND MORE

Betting big on the Williamsburg waterfront

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CORONAVIRUS ALERT

FROM THE NEWSROOM | FRED P. GABRIEL | PUBLISHER

CRAIN’S WILL TAKE A HARD LOOK AT HOW WE CAN BE MORE INCLUSIVE

THE NATIONWIDE protests following the death of George Floyd, an unarmed black man in Minneapolis, has the potential to be a transformative moment in New York City’s long history of racial unrest. That is, if the looting and vandalizing that took place last week don’t drown out protesters’ cries for racial equality in law enforcement. While it’s time for the violence and destruction to end, it’s also time for politicians as well as business and civic leaders to take a hard look at the ideas, biases and practices that contribute to racial inequality. While Crain’s has long strove to reflect diverse perspectives and experiences in our coverage, we can do better. In the weeks and months ahead, we will take a hard look at how we can be more intentional in our efforts to be inclusive in our sourcing and in our programming of events. I encourage readers to reach out to me with story ideas, opinion pieces and general feedback. As always, we appreciate your readership and support. You can reach me at fred.gabriel @CrainsNewYork.com

POLITICS

First black woman to join NJ’s highest court BLOOMBERG

ew Jersey Gov. Phil Murphy nominated Fabiana Pierre-Louis, a daughter of Haitian immigrants, to serve on the state Supreme Court, where she would be its first black woman. Pierre-Louis, 39, is a partner in the Cherry Hill office of Montgomery, McCracken, Walker & Rhoads, specializing in white-collar crime and government investigations, according to the firm’s website. A graduate of Rutgers University Law School, she practiced for nine years in the U.S. Attorney’s Office for New Jersey, serving as an assistant U.S. attorney in Newark and later as

attorney-in-charge for Trenton and then Camden. “My life is certainly not representative of the traditional trajectory of someone who one day will be nominated to sit on the Supreme Court of New Jersey,” she said. The nomination is subject to approval from the Democratic-controlled state Senate. Pierre-Louis would replace Justice Walter Timpone, an appointee of former Republican Gov. Chris Christie, who will leave the seven-member bench when he reaches the mandatory retirement age of 70 this year. Pierre-Louis would be the youngest justice among the seven and the third woman. ■

WEBCAST CALLOUT

City’s hospitals report millions of dollars in losses due to Covid-19 BY JONATHAN LAMANTIA

ity hospitals are no longer seeing a steady stream of Covid-19 patients through their doors, but now they are left to clean up the financial mess from the pandemic. Most of the region’s biggest health systems are reporting massive financial losses for the first three months of the year. Northwell Health, the state’s largest private health system with 19 hospitals, lost $141 million. New York–Presbyterian lost $128.5 million on the operations of its 10 campuses. Montefiore Health System, which runs facilities in the Bronx and the Hudson Valley, lost $96.8 million. The results represented loss margins of 4% to 6% for the systems. As hospitals ratcheted up spending on staffing and supplies, they also had to stop all nonurgent surgeries and convert their money- ating income in the first quarter, making operating rooms into inten- which represented a drop-off of sive care units to make room for about one-third from its perforCovid-19 patients. Individuals shied mance in early 2019. The hospital said its operating away from going to emergency departments, physician offices and profit was driven by an improvement in revenue before it radiology practices, rebegan feeling the adverse ducing health systems’ effects of Covid-19 in the revenue further, said Ken final two weeks of March. Kaufman, chair and manThe results include the aging director of health AMOUNT LOST activities of its Upper East care consulting firm by Northwell Side and Queens camKaufman Hall. Health, the puses but not its Beth Is“It was a double whamstate’s largest rael, Brooklyn, Morningmy,” Kaufman said. private system side and Mount Sinai New York–Presbyterian West hospitals, which said the financial impact was worse than it had first projected have lost tens of millions of dollars when the outbreak worsened in in recent years. mid-March. “Expenses for personal protective Federal help equipment (PPE) and incremental Local hospitals began to see and backfill personnel, including some relief from the federal governclinicians from outside of NYPH, re- ment in mid-April, just as the outquired to meet inpatient demand, break was hitting its peak. as well as expenses for transportaA complete picture won’t be tion, housing, food and child care available until later in the year, but resources to support that personnel, greatly exceeded estimate,” it wrote in its financial statement. The first-quarter results are part of health systems’ obligations to bondholders, but only a narrow slice of New York’s hospitals are represented. Smaller institutions in the Bronx, Brooklyn and Queens without ties health systems thus far have said to a regional system, especially federal support has been insuffithose that treat mostly Medicaid cient. and uninsured patients, could fare Northwell received $1 billion even worse. They typically only re- from federal Cares Act programs, port financial results annually. Pub- New York–Presbyterian got $567 lic and perennially cash-strapped million, and Mount Sinai received healthy system NYC Health and about $263 million, according to fiHospitals also hasn’t yet disclosed nancial filings. They also benefited the pandemic’s impact on it. from Medicare providing advance Mount Sinai Hospital was an out- payments to hospitals to improve lier, reporting $33.3 million in oper- cash flow, which sent billions more

$141M

NEW YORK-PRESBYTERIAN lost a $128.5 million on the operations of its 10 campuses. The hospital group received $567 in federal aid.

BUCK ENNIS

Politicians, biz leaders should examine issues

to area facilities. Hospitals will have to pay that money back, however. If they don’t refund Medicare within a year, they face a 10.25% interest rate on outstanding balances. The Greater New York Hospital Association is lobbying Congress to convert those advance payments into grants. It’s also seeking more money for state and local governments to avoid Medicaid cuts that would hurt hospitals. The measures could be part of a fourth coronavirus relief package, which is currently being debated in Congress. Hospitals have several options in the meantime to free up cash, Kaufman said. Labor costs represent more than half of most hospitals’ expenses, and some might look to cut temporary staff. That issue is more fraught in New York, where hospitals are concerned about a second wave of cases. Facilities also could look at their real estate assets and reevaluate whether they need as much office space as virtual patient visits and remote work become more commonplace. Larger hospitals also could convert some short-term borrowing into long-term debt. For those facilities that mostly treat Medicaid patients, access to capital is more challenging, and the state might need to intervene to prop up some hospitals. The state already commits hundreds of millions each year toward that cause. “At some point we’ll have to have an accounting of hospitals that will stand on their own and those that can’t,” Kaufman said. ■

“SOME HOSPITALS CAN STAND ON THEIR OWN AND SOME CAN’T”

JUNE 16 LIFE AFTER COVID-19: HOW THE PANDEMIC WILL CHANGE HEALTH CARE New York is wrestling with one of the most devastating outbreaks in history. What long-term effects will Covid-19 have on health care in the tristate area? Top health care professionals discuss their biggest takeaways from the pandemic and what they foresee happening in the future.

CrainsNewYork.com/June16HPWebcast

Vol. 36, No. 21, June 8, 2020—Crain’s New York Business (ISSN 8756-789X) is published weekly, except for bimonthly in January, July and August and the last issue in December, by Crain Communications Inc., 685 Third Ave., New York, NY 10017. Periodicals postage paid at New York, NY, and additional mailing offices. Postmaster: Send address changes to: Crain’s New York Business, Circulation Department, PO Box 433279, Palm Coast, FL 32143-9681. For subscriber service: call 877-824-9379; fax 313-446-6777. $3.00 a copy; $129.00 per year. (GST No. 13676-0444-RT) ©Entire contents copyright 2020 by Crain Communications Inc. All rights reserved. 2 | CRAIN’S NEW YORK BUSINESS | JUNE 8, 2020

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ARTS & CULTURE

GETTY IMAGES

HOERLEGUGGENHEIM, who owns the gallery HG Contemporary, at the opening of an exhibition in 2017

FLIMFLAM ARTIST?

An art dealer who claims to be a relative of the Guggenheim family is no stranger to controversy

BY GWEN EVERETT

e has all the hallmarks of an elite art dealer: He goes to the right art fairs, he represents buzzy artists, he has a gallery in Chelsea, and he has one of the most prestigious last names in the industry. But Philippe Hoerle-Guggenheim is not who he says he is, a lawsuit filed last week in state Supreme Court claims. The

dealer trades on having distant familial ties to Solomon Guggenheim that don’t exist and owes acclaimed artist Natvar Bhavsar more that $2 million worth of unsold pieces and unpaid commissions, the lawsuit alleges. Bhavsar, whose works have been shown at the Metropolitan Museum of Art and Boston’s Museum of Fine Art, spent the past year and a half chasing after Hoerle-Guggenheim for

“MY CLIENT TURNED OVER $2 MILLION WORTH OF ARTWORK TO SOMEBODY WHO ABUSED HIS TRUST”

See ARTIST on page 17

CORONAVIRUS ALERT

Home listings collapse 85% in the high season BY RYAN DEFFENBAUGH

ew home listings in the five boroughs hit a record low in April, by one measure, an ominous start to what is normally a busy spring and summer selling season. Just 717 homes came on the market last month, an 85% drop from April 2019, new StreetEasy data shows. “Most New Yorkers who don’t absolutely

need to buy or sell right now simply aren’t doing so,” StreetEasy economist Nancy Wu said.

Deep discount The dual loss of both sellers and buyers during the pandemic has kept prices mostly flat, with just 2.1% of Manhattan listings offering a price cut in April, down 12% from the same period last

PRICED TO SELL

$75K

MEDIAN REDUCTION for the city due to the pandemic impact on the market. Typically, discounts hover around $50,000.

year. But the sellers who do make cuts are marking down prices dramatically. A separate report out last Friday from listings aggregator UrbanDigs found the median price reduction for city homes was just under $75,000 in April. Typical discounts hovered around $50,000 for the first three

months of the year, according to the data.

Buyer’s market New Yorkers who absolutely must sell are cutting prices much more than typical to convince nervous buyers during a pandemic, UrbanDigs CEO Noah Rosenblatt said. Otherwise, he said, it appears sellers are willing to wait out the worst of the pandemic to see if they can land a buyer later without a discount. ■ JUNE 8, 2020 | CRAIN’S NEW YORK BUSINESS | 3

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CORONAVIRUS ALERT

Modular builder shifts to relief effort EverBlock thrives by converting spaces into temporary hospitals BY DIANE HESS

How businesses are adapting to the coronavirus crisis May, when Mayor Bill de Blasio proposed an expansion of coronavirus testing to 20,000 procedures per day, city reps reached out to EverBlock to help assemble 500 Covid-19 testing rooms across nine locations. Engineers built the first beta site in a gym at P.S. 17 on Forrest Avenue in the Bronx. Once they received the building material, the team completed 30 10-foot-by-10foot pods in less than a day. “If they had to use traditional framing, Sheetrock and taping, it would have taken two weeks,” said Rosan. EverBlock’s revenue for 2020 is expected to top $20 million, which is up from last year’s $7.5 million. The firm has already booked $17 million so far this year. The company has kept all 14 employees working through the pandemic and is considering hiring two more. The company also outsources work to three independent factories.

Disaster experience Rosan has relied on prior disaster-relief experience to build his business. As CEO of Signature Systems Group, a flooring business he owned for 20 years and sold in 2012, he provided tent flooring after Hurricanes Katrina, Ike and Sandy. He did the same following the 2010

SOPHIA GERMER

hen Covid-19 loomed on the verge of becoming a global pandemic, Arnon Rosan, founder and CEO of EverBlock Systems in Manhattan, feared it would be the end of his five-year-old business. “We had a companywide call to figure out where to sell our products,” said Rosan, whose firm manufactures large-scale, Lego-like blocks, divider walls and modular flooring. “Office buildings and schools were closing, and no one was doing events. These were all big parts of our business.” What Rosan realized in midMarch, as EverBlock’s sales prospects seemed bleak, was that there was an opportunity in the relief effort. The nation’s emergency rooms had begun to overflow, and there was going to be a need for temporary hospitals. It dawned on him that his modular components could be used to convert raw spaces, such as gymnasiums and convention centers, into treatment zones for Covid-19 patients. “I had my sales team call every governor’s office and health department in the country,” said Rosan. “Pretty soon the bites started coming in, and then we got our first big hit from New Orleans.” EverBlock turned a New Orleans convention center into a hospital with 2,000 beds. It sent 40 pallets of interlocking flooring for tented structures in South Carolina. It provided structures for temporary hospitals in Paramus, N.J. And in mid-

EVERBLOCK turned a New Orleans convention center into a 2,000-bed temporary hospital.

earthquake in Haiti. “When we got the order for a hospital in New Orleans, which equaled more than a year of business, we had to make it happen,” said Rosan. EverBlock had a week to get thousands of wall panels and building blocks to Louisiana. Before his supply chains became stressed, Rosan reserved 25 truckloads of fiberglass and fire-retardant plastic. He also cleared his 10,000-squarefoot warehouse on Whittier Street in the Bronx for storage. When Rosan first created EverBlock Systems, he thought the company’s multicolor, whimsical forms would be used solely for children’s furniture. The concept quickly evolved. EverBlock began doing branding and marketing events, and it caught the eye of school-

teachers. The firm once built a giant pyramid for a classroom study of Egypt. In the past two years, tech companies, including Amazon, Google and Apple, got in on the action, using the blocks to build out their offices. “All of our products are completely modular,” said Rosan. “One day they might be a 10-foot-by-10foot Covid testing room with a little door, and the next day they could become a classroom.”

In the midst of the pandemic, Rosan is fielding calls from heads of corporations considering how they will bring their employees back to work, in addition to doctor offices, medical clinics and schools. “I would love to see events come back as well as creative school programs,” Rosan said. “But the reality is, most of our work, until there is a vaccine or effective treatment, will be about dividing spaces and social distancing.” ■

Navy Yard tech hub will soon measure energy plug by plug

ffice landlords are investing millions of dollars to cut their electricity usage and meet city-mandated emission drops. One new company says they should take things plug by plug. “This is the final frontier of building management,” said David Solomon, chief revenue officer for Sapient Industries.

technology can alert companies when a staffer's computer is running 24/7 or a C-suite executive’s minifridge is soaking up more than its fair share of power. The company estimates its technology, once installed, can save from 10% to 20% of energy costs.

Eye on usage The Philadelphia-based startup has teamed with Newlab in the Brooklyn Navy Yard to track individual power usage at the 84,000-square-foot center. The facility is home to offices for 150 startups as well as advanced manufacturing tools. “We have big equipment that draws a lot of energy,” said Shaina Horowitz, Newlab’s vice president of product and programs. “It is really important that we are able to

“THIS IS THE FINAL FRONTIER OF BUILDING MANAGEMENT” Most landlords have already invested heavily in cutting their heating and cooling bills and lighting costs. But individual outlets are trickier to track. Using smart plugs and customized software, Sapient’s

quantify that usage as we think about how to use our space going forward.” Sapient is one of four startups named to Newlab's Circular City program, a collaboration with the city’s Economic Development Corp. The idea behind the program is to find companies with environmentally friendly tech and help them grow within the New York market. Circular City launched its first cohort in 2018. The companies joining Sapient this summer have similar eco-friendly aims. Aclima will use sensors throughout Brooklyn to track air quality on individual blocks. Another firm, Algramo, will install smart-dispensing systems for cleaning products and hand sanitizer at city businesses. The last company, RanMarine USA, will launch drones from Governors Island later this year to collect waste and track water quality in

NEWLAB at the Brooklyn Navy Yard will be tracking individual power usage.

the Buttermilk Channel.

Difficult task For Sapient, there is a “massive opportunity” in New York, as described by Solomon. A City Council bill passed in 2019 requires owners of buildings 25,000 square feet or larger to cut emissions 40% by 2030. The Covid-19 pandemic has shown the difficulty of that task. Even with offices emptied to just 2% of typical capacity in March, emissions fell only 30%, according to a

BUCK ENNIS

BY RYAN DEFFENBAUGH

report last month by analytics firm Prescriptive Data. Additional savings could come through identifying unnecessary power usage. A university in upstate New York recently used Sapient’s software to track down individual workstations that were still drawing down power despite the school’s closure. “This is the first time a facilities manager can tell the boss with certainty, ‘Yes, everything is off,’ ” Solomon said. ■

4 | CRAIN’S NEW YORK BUSINESS | JUNE 8, 2020

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REAL ESTATE

Jersey City’s mayor pitches historic housing plans to cramped New Yorkers

or Jersey City Mayor Steve Fulop, the pandemic is a good time to lure New Yorkers feeling anxious and cramped. Fulop, 43, has reached a deal with developers for the first phase of Bayfront, an 8,000-unit project at the site of a former chemical plant on the Hackensack River. “There is a premium associated with Manhattan, and places like Jersey City become more marketable,” Fulop said. Bayfront is the biggest project in Jersey City since the Newport community helped transform the Hudson River waterfront into a complex of high-rise office and residential buildings beginning in the 1980s. New Jersey officials have used cheaper real estate prices and tax benefits to entice New York residents and companies across the Hudson River for decades. Jersey City is a quick train ride into Man-

first phase of the development. Of the 8,000 planned homes, 35% will be affordable, Fulop said. Jersey City has been hit hard by the coronavirus. There are more positive cases in the Hudson County city of 271,000 than in Oregon or New Hampshire. The city has frozen hiring and raises after offering buyouts to municipal workers and is seeking to refinance about $60 million in debt.

Jersey City may still hold appeal for New Yorkers who want more space but aren’t ready to flee too far from Manhattan. The hundreds of affordable homes also will help local residents who are suffering financially, Fulop said. “We are demonstrating our continued commitment to our more vulnerable residents who are among the hardest hit by this pandemic,” he said. ■

BLOOMBERG

WITH THE PANDEMIC CREATING ANXIETY ABOUT DENSITY IN OFFICES AND ON TRAINS, NEW YORKERS SEEK TO SPREAD OUT hattan, and in recent years its population has increased as prominent Wall Street firms opened offices on the waterfront and new residential projects offered amenities and space that would cost more in New York City. Now, with the pandemic creating anxiety about dense office buildings and public transportation, New Yorkers who have been working from home are considering leaving for the suburbs to spread out. Still, they might look farther than Jersey City if commutes into Manhattan are less frequent and they want more space. “It doesn’t have a ton of open space—you’re talking about apartments,” said Barry Hersh, a real estate professor at New York University, of Jersey City. “It’s just not different enough.” For Fulop, who has pushed to develop areas of Jersey City beyond the “Wall Street West” area on the Hudson, the project is an opportunity to drive growth on the other side of the city.

A forward-thinking real estate firm providing brokerage, property management, and consulting services since 1920.

212.679.5500 adamsre.com

First phase Jersey City bought the roughly 100-acre site from Honeywell International for $100 million in 2016. The developers—a partnership between Pennrose and Omni New York and BRP Development Group—will pay $26 million to build more than 1,000 units for the JUNE 8, 2020 | CRAIN’S NEW YORK BUSINESS | 5

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IN THE MARKETS

Valley Bank raises cash before relief winds down The small-biz lender is shoring up its defenses against an expected wave of defaults

BANKS ARE EXPOSED TO EVERY PART OF AN ECONOMY IN WHICH 40 MILLION PEOPLE HAVE LOST THEIR JOBS

WALL STREET expects the economy to snap back strongly BLOOMBERG

he stock market’s surpris- summer. “That’s when we’ll find out which ing rebound demonstrates that Wall Street expects the borrowers have a viable business economy to snap back model,” he said. No one knows how many busistrongly. Valley Bank Chief Execunesses will be swept away tive Ira Robbins isn’t so by the coronavirus crisis, sure. but banks and their invesNot all small businesstors are bracing for big caes received Paycheck sualties. That’s why the Protection Program KBW Bank Index remains loans, and soon thoudown by 30% this year sands may be forced to while the S&P 500 is just throw in the towel. To 8% off its high. shore up its defenses The disconnect illusagainst the expected trates how banks are exwave of defaults, New JerAARON ELSTEIN posed to every part of an sey-based Valley, which economy in which 40 milspecializes in lending to small and midsize firms, raised lion people have lost their jobs. The $115 million in new capital last stock market’s ebbs and flows, however, are determined to a large week. Robbins described the cash infu- extent by the price movements of sion as “an insurance policy at a Facebook, Amazon, Apple, Microrate that makes sense.” He wants his soft, Netflix and Google, which collectively employ about 1 million people. Bank stocks typically trade at or above book value, or net worth, but the group now trades at a 12% discount, RBC Capital bank prepared for when the gov- Markets said. Citigroup trades ernment’s emergency relief mea- around a 40% discount. “The price-to-book level is based sures wind down and loan forbearance programs expire in the on the inability to gauge what real

asset values are in the loan portfolio,” said Dick Bove, an Odeon Capital banking analyst. Loan-loss provisions for the second quarter “are likely to equal or exceed” the dramatic increases banks recorded in April, RBC Capital analyst Gerard Cassidy said June 3 in a report. Millions of unemployed or furloughed consumers are struggling with their credit card

bills, rent or mortgages, he said, and widespread defaults among small-business borrowers seem inevitable.

Well capitalized At Valley Bank the $115 million in new cash at a cost of 5.25% lifts the bank’s risk-based capital ratio to 11.9% from 11.5%. Banks with ratios of 10% or more are considered

to be well capitalized, so Valley didn’t need the money to satisfy regulators. But it’s prudent to invest in sandbags before the flood strikes. “This is a smart move for Valley,” analysts at Keefe Bruyette & Woods said. “It’s always better to raise money when the market is open,” Valley Bank’s Robbins said, “rather than when you need it.” ■

ON NEW YORK

Will 400,000 people really return to work? A review of the jobs lost in the sectors that will resume activity suggests otherwise new projects amid the long-term uncertainty about the economy. The 60,000 people furloughed in health care could be back on the job as doctor and dentist offices reopen, facing a huge backlog of deferred visits. Yet even here not everyone will return. Dental hygienists appear very reluctant to return, both because of the health risk and because unemployment benefits currently are more than they make.

Slow restaffing Real estate and retail callbacks will depend on whether people are willing to return to previous patterns of shopping. As Catbird shows, many stores themselves will be cautious in restaffing as they assess demand. Not part of any recall in the near future is the hardest-hit sector. Leisure and hospitality shed 335,000 jobs in March and April, and none of those workers can expect to be back on the job anytime soon. Nor can staff at colleges, universities and private schools, which cut 40,000 positions that will be restored only in September and only

“WILL PEOPLE EVEN BE WILLING TO SHOP?” SHE ASKED. “I THINK THERE IS A HUGE FEAR FACTOR”

CATBIRD will recall about half of its workers in the first phase of the reopening.

if schools reopen. It is possible the mayor and the governor are including people who have been working from home, but such employees wouldn’t seem to have the option of returning to their workplaces until phase three, and companies have made it clear they do not expect to recall large numbers to their offices until after the summer. The experience of Catbird shows how the changes companies have had to make will slow any rebound. When the shutdown was ordered, Vardi furloughed all but 20 of her 110 workers (keeping their health coverage through June). Five man-

CATBIRD

hen phase one of the strations and damage from the lootreopening of the New ing that started last week will change York City economy businesses’ timetable to reopen. In March and April the city shed begins this week, 870,000 jobs, more than Roni Vardi will recall New York lost in its great about half her manufacrecession between 1969 turing workers to the and 1977, when employBrooklyn Navy Yard, ment plunged by 620,000. where her company, CatThe two-month drop also bird, makes the jewelry wiped out most of the she used to sell online and 992,000 jobs added in the in three stores in the city. 10-year economic expanShe has spent the past sion that began in late several weeks reconfigur2009. ing the space to meet the Manufacturing and social-distancing require- GREG DAVID construction, the indusments of the new normal. But she is in no rush to reopen her tries at the top of the reopening list, retail stores, even when phase two, lost a combined 43,000, but not all scheduled for two weeks from now, will return to work. The new guidelines require manufacturers to rewill allow it. “Will people even be willing to shop?” she asked. “I think there is a huge fear factor.” Mayor Bill de Blasio and Gov. Andrew Cuomo have both claimed that 400,000 people will be returning to work when phase one begins, but the plans of Vardi and a review of the jobs lost in the sectors that will resume activity don’t add up to duce their workforce. Construction 400,000 in phase one and probably will be better able to call workers not even phase two, scheduled for back, but the rebound also may be the last part of the month. It is also temporary because it is unlikely unclear if the continued demon- many developers will be starting

agers headed to their fulfillment operation at the Navy Yard, where they worked to fulfill web orders using the stock they had collected from their retail outlets. Yet even when she gets her workers up to speed with the new arrangements, the best she expects to produce is 25% of her previous output, not enough to reopen her retail stores even if New Yorkers prove willing to shop in person. “It’s enough for the short term but not for the medium term and not for the long term,” she said. ■ Greg David writes a regular column for CrainsNewYork.com.

6 | CRAIN’S NEW YORK BUSINESS | JUNE 8, 2020

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CORONAVIRUS ALERT

Progressives, developers unite to fight budget cuts Mayor’s plan could delay 20,000 affordable apartments from being built

he fight against city capital spending cuts that could delay 20,000 affordable apartments has united real estate developers and the progressive City Council. The Real Estate Board of New York and 13 council members are among the more than 150 signatories of a letter to Mayor Bill de Blasio that’s critical of his plan to cut the capital budget of the city’s Department of Housing Preservation and Development, which helps fa-

panding affordable housing in the city, the council members wrote. Breaking Ground, the city’s largest supportive housing developer, has a 175-unit construction project in the north Bronx that is being held up by the uncertainty in funding. To land a bridge loan to start construction, the organization needs a “soft commitment” letter from the city saying that HPD will eventually fund the construction, repaying the loan. The department has temporarily stopped issuing such letters, said Brenda Rosen, Breaking Ground’s CEO. “At this point, we are cautiously optimistic it is just a delay,” Rosen said. “Whether or not we will be told these projects are not happening and we will have to limit our pipeline, we don’t yet know.”

keep us safe and healthy,” the letter read. The mayor’s plan would cut $583 million from HPD’s 2020 capital budget and $457 million from the same line in 2021. The cuts represent 40% of the department’s total capital spending. The loss in funding could delay plans to build 5,000 affordable units and preserve 15,000 apartments, the New York Housing Conference estimated. The advocacy group organized the letter, which asked the mayor to fully restore funding. It’s part of a broad effort to restore capital spending across the city budget. The cuts are part of de Blasio’s budget plan, which would shave $2.3 billion from the city’s capital spending plan in the next four years, according to an analysis released June 1 by Councilman Brad Lander and Councilwoman Vanessa Gibson. The budget plan would “severely diminish” de Blasio’s legacy of ex-

DE BLASIO’S PLAN WOULD SHAVE $2.3M FROM CITY

CAPITAL SPENDING cilitate the construction of affordable-housing units. “As we approach reopening our city, investing in affordable housing must be part of our recovery— to bring back jobs, to stimulate the economy and, most importantly, to

Arker signs on Arker Cos. is among the 161 companies and organizations—including nonprofits such as Breaking Ground—that have signed on to the Housing Conference letter. The developer received approval

THE CUTS represent 40% of HPD’s total capital spending.

BLOOMBERG

BY RYAN DEFFENBAUGH

last year to build what would be the largest private expansion of affordable housing during de Blasio’s administration. The plan calls for building 2,050 apartments at the former Peninsula Hospital site in Edgemere. Such projects rely on public subsidies, and massive capital cuts could jeopardize them. Comptroller Scott Stringer warned that cutting the spending

would provide only short-term savings that would be outweighed by potential lost jobs and deteriorated infrastructure. The de Blasio administration has described the cuts as a necessary adjustment in the pandemic era. Covid-19 has made a $9 billion gap in the city budget, the mayor said last month, warning that “we won’t be able to see the revenue recover anytime soon.” ■

City’s finance jobs won’t recover for six years, analysis shows BLOOMBERG

ew York City’s finance industry won’t recover from the devastation wrought by Covid-19 until 2026, according to an analysis by software firm ThinkIQ that ranks U.S. employment markets. The NYC region lost about 8% of its finance jobs this year, down from its peak of more than 800,000 last August. Coronavirus, which has killed at least 21,000 New Yorkers so far, isn’t the culprit in all of those cuts. But the lockdown stemming from the illness caused a domino effect on everything from rents to mortgage payments.

The finance sector spans industries ranging from banking and securities to real estate and insurance. Most Wall Street firms pledged not to cut staff during the pandemic, but Bloomberg reported last month that Cantor Fitzgerald was planning to lay off hundreds of workers due to the virus. ThinkIQ, based in Aliso Viejo, California, uses 10 key economic indicators to rank U.S. employment markets—including job and wage growth, demographics and educational attainment. New York ranks No. 1 in population but doesn’t fare as well in other metrics such as wage increases (No. 47) and job growth (No. 143).

New York was rated the world’s leading financial market by the Global Financial Centres Index by Z/Yen Partners in collaboration with the China Development Institute and according to a survey from Duff & Phelps. The city that never sleeps has shown its resiliency multiple times in the last 20 years, including from the Great Recession. ThinkIQ predicts that the employment level will be almost back to 2019 levels in six years. Most industries will take years to recoup. Employment in the leisure and hospitality arena, for instance, is expected to reach only about 90% of its 2019 level by 2026, the latest year in the forecast. ■

BIG APPLE RECOVERY Education and Health Services Financial Activities

Professional and Business Services Mining, Logging and Construction

Government and Public Administration Leisure and Hospitality

You’re not alone when you have an experienced Grassi business advisor at your side.

120%

111% 108% 101% 100

98%

grassicpas.com/consulting

97% 90% 80

2019

2020

2021

2022

2023

2024

2025

2026 Source: ThinkIQ

JUNE 8, 2020 | CRAIN’S NEW YORK BUSINESS | 7

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president K.C. Crain senior executive vice president Chris Crain group publisher Mary Kramer

EDITORIAL

associate publisher Lisa Rudy

City should help all small businesses that suffered losses from vandals and looters

EDITORIAL editor Robert Hordt assistant managing editors

Christine Haughney (special projects), Janon Fisher, Gabriella Iannetta (digital)

And now, just as the city appeared to be turning the corner on the pandemic and businesses were taking those first few steps toward reopening, the rug was pulled out from underneath them in the form of nightly violence and looting hidden behind the police-brutality protests. To be sure, the vast majority of individuals participating marched in peace and conducted themselves honorably. But the small minority of thieves and vandals with mayhem on their minds inflicted a good deal of damage on New York last week, both economically and psychologically. Remember, just because the city reopens for business doesn’t mean that the customers will come back. And the images of roving bandits pillaging Macy’s and name-brand stores on Fifth Avenue on nightly news programs doesn’t instill confidence that the streets of New York are safe for either residents or out-of-towners contemplating a visit. The city may not be able to wave a magic wand to bring back customers, but it can help the small businesses that have been victimized. Last week, Mayor Bill de Blasio announced a $500,000

JUST BECAUSE THE CITY REOPENS DOESN’T MEAN CUSTOMERS WILL RETURN throughout the city have been suffering—and sacrificing—for quite a while now. While many of us have been able to work from home during the pandemic, small-business owners running restaurants, bars and retail shops have been forced to give up all or a significant portion of their income because of the lockdown.

Frederick P. Gabriel Jr.

senior editor Telisha Bryan associate editor Lizeth Beltran (digital) art director Carolyn McClain photographer Buck Ennis data editor Gerald Schifman senior reporters Aaron Elstein,

Jonathan LaMantia reporters Ryan Deffenbaugh, Gwen Everett,

Jennifer Henderson, Brian Pascus, Natalie Sachmechi columnist Greg David contributors Tom Acitelli, Ronald DeCicco,

Cara Eisenpress, Cheryl S. Grant, Steve Krupinski, Danielle McManus Sladek, Mark Yawdoszyn to contact the newsroom:

STORES were vandalized and looted during protests.

www.crainsnewyork.com/staff GETTY IMAGES

alk about being kicked when you’re down. Two weeks after Alexandra Abdelwahed and her husband reopened their East Village restaurant following a threemonth sabbatical courtesy of the Covid-19 pandemic, someone threw a bottle through B&H Dairy’s front window last week, narrowly missing one of her employees inside. “What does this business have to do with the protest?” she asked Crain’s reporter Natalie Sachmechi. “It’s not fair.” She said if the unrest continued she feared that business and the city would suffer. The fact of the matter is her business and thousands like it

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aid package for Bronx businesses that had been vandalized. Grants of up to $10,000 will be available for repairs and security sytems. That’s a start, but why limit this relief to the Bronx? Shops in Manhattan and Brooklyn also suffered losses. While insurance may cover some or most of these damages, it may not cover them all, and not every business will have adequate coverage. Hopefully, business owners will not run into the same resistance they did from the industry when they filed claims

following the coronavirus pandemic. Once the dust settles and New York is truly open again, the city should also launch a well-funded marketing campaign to support all of the city’s businesses, but especially its small independent ones that have taken such a beating these past few months. Unfortunately, not all of the city’s small businesses will come back, but those that do will need all the help they can get. The city owes it to them to provide assistance. ■

senior account managers Rob Pierce,

Stuart Smilowitz, Tori Weil account executive Devin Cavallo integrated marketing manager Jonathan Yan,

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www.crainsnewyork.com/events manager of conferences & events

OP-ED

Ana Jimenez, ajimenez@crainsnewyork

Racially biased policing is real

REPRINTS director, reprints & licensing Lauren Melesio,

212.210.0707, lmelesio@crain.com PRODUCTION

t was a typical warm summer night out with friends. I had just graduated from high school and would start college in the fall. Life felt free and light, and the warm summer air around us was filled with laughter. After dinner we decided our next move would be to go to a drive-in movie. About a mile down the road, the four of us realized we would not make it to the theater in time for the movie, so we pulled into a nearby parking lot of a closed gas station. We hopped out of our cars to discuss our options. It was 9:30 p.m. The night was still young, and in a playful fashion, one of my male friends started to chase us in the parking lot; we dodged one another as if we were playing a game of tag. The laughter was fresh, and it was a memorable moment of teenage fun. Then, out of nowhere, seven police cars converged on us. Guns were drawn and there were shouts of “Put your hands up!” Lights

Cooper falsely call the police on a black man in Central Park, it was a trigger for me. My mind rewinds to that traumatic experience. What if it had turned out differently? What if the officer who deescalated the situation was not there? Could I have been killed? Could one of my friends have been killed? There were no cell phones, no camera phones and no body cameras back then. What would have been the story told that night? My mind fast forwards. In the present, I think about the safety and innocence of my husband and two sons. And I cry. I cry because the thoughts are heavy, and the burden and trauma are real. I think about Ahmaud Arbery and George Floyd. I think about Jordan Davis, who—just like me—was out for a night of teenage fun with friends; Breonna Taylor; Trayvon Martin; Tamir Rice; Sandra Bland; and the countless others whose names we know and BUCK ENNIS

BY NATASHA HOLIDAY

flashed. Cops shouted over a bullhorn for my two male friends to get on their knees, and they complied. As my friend slowly stretched his arms in the air, I still recall his heavy sigh, “here we go again.” One police officer was visibly on edge and would not lower his gun. Stepping forward, an officer asked us what we were doing. After I explained, he HOLIDAY said they had received a dispatch that a group of black people had guns at the gas station—a complete and utter lie. They searched my male friends while the others had their guns trained on us. I thank God for the officer who stepped forward and deescalated the situation—arguing with the officer on edge to put his gun away. Afterward, I asked for the officers’ badge numbers, which the officer visibly on edge refused to provide. My friends’ heads were lowered. All the laughter that had filled the warm summer air was gone. When I saw the video of Amy

those who we don’t. And in the midst of it all, I try to work—to deliver for my clients and colleagues, answer emails, think critically, develop pitch books. I drag; my productivity slips. I step back and take care of myself mentally and emotionally. I check in on friends just to make sure they are OK—or at least to make sure they know they are not alone in their feelings of frustration and sadness that the violence and attacks on black and brown bodies keeps happening. And I write this letter so people near and far, of all ethnicities, genders, races, religions and sexual orientations know this: You are not alone. We must expand and advance our allyship to marginalized communities. Please speak up and acknowledge injustice exists in society, and equal application of the law is not always fairly applied. ■

production and pre-press director

Natasha Holiday is the managing director of the Municipal Finance Group at RBC Capital Markets and a Crain’s 40 Under 40 honoree.

chairman Mrs. G.D. Crain Jr. [1911-1996]

Simone Pryce media services manager Nicole Spell SUBSCRIPTION CUSTOMER SERVICE

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8 | CRAIN’S NEW YORK BUSINESS | JUNE 8, 2020

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OP-ED

Essential workers are heroes; it’s time for Albany to recognize that

e may call essential workers heroes, but many aren’t treated that way on

the job. We continue to clap for them every night at 7, yet the sounds of our cheers and our applause ricocheting across rooftops have done little to change their working conditions. Every day more than 2 million New Yorkers leave their homes and report to jobs in essential sectors. Many still are not receiving adequate personal protective equipment from employers and work in facilities that do not practice social distancing. Without increased protection, these workers are at risk of exposure to a second surge of Covid-19 as the economy reopens and warmer weather brings more people together. If more essential workers get infected in the coming weeks, their co-workers, families and communities will be vulnerable, too. That would be bad for everyone in New York. Fortunately, Gov. Andrew Cuomo has the power to act before it’s

too late. Cuomo can and should move quickly to implement a New York Health and Essential Rights Order to protect public health and give essential workers increased protection as we pursue the long journey toward economic recovery from the Covid-19 pandemic. A broad coalition of medical experts, workers, labor unions, and health and safety leaders has endorsed a concrete plan for how Cuomo can structure and pass an executive order to improve health and safety protocols in New York’s essential workplaces.

Federal failure The push to enact the package of bills comes amid the failure by Trump and the federal government to protect workers from the virus. New York must step up and lead the nation. As envisioned, a health and essential rights order would require essential businesses to provide personal protective equipment and meet clear standards for physical distancing, hand hygiene, disinfection and deep cleaning. Businesses would provide notice when work-

ers contract the virus. In addition, essential workers would not face punitive action for raising concerns or sharing information about unaddressed risks of contracting or spreading Covid-19 in their jobs. Instead, businesses would establish pandemic safety committees in which workers could raise concerns about health and safety conditions. Employers would be notified of workers’ complaints. Any worker would have the right to refuse to work when they feel endangered by Covid-19. Essential workers are mainly women, people of color and immigrants; many of them are undocumented. Many who are doing these jobs have no other choice. As New York takes steps to reopen the economy, this order would help ensure all these workers can do their jobs safely and with dignity and respect. By protecting them, we protect ourselves, our families, our communities and our state. Essential workers put their lives on the line every day. Consider the full range of what they do: They deliver health care, run the transit system, process food, stock grocery

ESSENTIAL WORKERS are mainly women, people of color and immigrants.

BLOOMBERG

BY MARITZA SILVA-FARRELL

stores, collect the garbage, clean the streets, deliver packages and keep government offices open, among many other tasks. Society could not function without them. Yet even in this time of crisis, many essential workers have been exploited and treated as disposable, especially by employers who put greed and profit ahead of everything else. In recent weeks and months, these workers have taken action and fought back. Nurses have held protests to demand more personal protective equipment. Amazon workers walked off the job, calling for their

warehouses to be shut and sanitized. Others went on strike. If our survival depends on essential workers and their jobs, it’s reasonable and fair to give them more power and more say over their workplace health and safety. A health and essential rights order is what they need and deserve. Cuomo should get it done immediately. ■ Maritza Silva-Farrell is the executive director of ALIGN, an advocacy organization that brings together labor, community and environmental justice organizations.

JUNE 8, 2020 | CRAIN’S NEW YORK BUSINESS | 9

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CORONAVIRUS ALERT

Cuomo’s eviction moratorium is unconstitutional, landlords charge

group of Westchester County landlords charges that Gov. Andrew Cuomo's executive order halting evictions during the pandemic violates their constitutional rights, according to a lawsuit filed in federal court. The governor’s edict, which is set to expire Aug. 20, deprived the owners of eight apartment buildings in Elmsford, Port Chester and Yonkers of their sole source of in-

say violates the terms of the units’ leases. All the while, the landlords still had to pay their mortgage, expenses related to their property and the taxes associated with it, which are due July 1, according to the complaint, filed May 27. The landlords, who own more than 100 rental units, are seeking the return of security deposits, which they say they need to protect against damage tenants can cause. Cuomo should have done more to make sure tenants had the money to pay, opened housing courts to litigate each case or even paid landlords directly to make sure they won’t fall through the cracks of the shattered housing sector, said Mark Guterman, the landlords’ attorney, in the lawsuit. “There is a contract between the landlord and tenant,” said Robert Rosenblatt, a real estate attorney who has worked on tenantlandlord disputes unrelated to the case. “I don’t think any govern-

“ALL THE PROTECTIONS I SEE PROTECT TENANTS, NOT LANDLORDS” come, the lawsuit claims. The property owners say Cuomo’s moratorium convinced their tenants that they didn’t need to pay rent until the end of the Covid-19 emergency, despite their ability to do so. The governor allowed tenants to pay rent by using their security deposit, which the landlords

ment organization has the right to interfere with the contract.”

Unfair? When it was first signed, the governor’s order caused a stir among property owners, who felt they were unfairly excluded from the state’s protection. They have been more than vocal about their concerns. Landlords in the city have threatened to withhold property taxes and called on Mayor Bill de Blasio to freeze the levies while evictions are banned. NYC Landlords Unite, a local movement against the upcoming property tax deadline, said it plans to bring a case against de Blasio for making them pay. “All the protections I see in sight protect the tenants, and nothing is protecting the landlords,” Rosenblatt said. The city’s housing court recently began scheduling conferences for eviction disputes to reduce the backlog of pending litigation, although only prepandemic cases are being heard. Tenant advocacy groups worry that this is a big step

GOVERNORANDREWCUOMO/FLICKR

BY NATALIE SACHMECHI

CUOMO

toward resuming the normal eviction process. “The courts should not be doing anything that could potentially increase the ranks of homelessness,” said Ava Farkas, executive director of the Met Council on Housing. Lawmakers continue to focus on providing relief for tenants struggling to make payments. State legislators recently passed a bill that could stop landlords from remov-

ing tenants for Covid-19-related nonpayment. The measure, if enacted, would allow a judge to keep the tenant on the hook for the missed payments, but the unpaid balance could not be used as grounds for eviction. “It’s not fair, and it’s not equitable,” Rosenblatt said. The governor’s office could not immediately be reached for comment. ■

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10 | CRAIN’S NEW YORK BUSINESS | JUNE 8, 2020

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ASKED & ANSWERED

INTERVIEW BY JUDITH MESSINA

WHO IS HE Managing director, global events, Out Leadership

ith June’s in-person Gay Pride Month activities canceled or postponed around the world, Out Leadership, which works with global companies to advance networking and recruitment opportunities for the LGBTQ community, has reworked the calendar of events. In partnership with 14 other LGBTQ groups, Out has expanded into virtual experiences that will take place every day of the month. Chris Frederick, 37, is managing director of global events for the organization, which is including conversations with athletes, top CEOs and LGBTQ pioneers and the debut of a new leadership curriculum among this year’s festivities, named Proudly Resilient. How did you manage to put together a virtual slate of dozens of Pride events in just seven weeks?

We were heads down and said, “Let’s figure this out.” Out Leadership has amazing connections to the business world and to the community. We focused on how to bring together world-class leaders to have dialogue in thoughtful and engaging ways about topics that matter to our community.

Virtual events allow you to attract viewers globally. How will you accommodate a broader audience?

We are trying to do programming that matters to people

REVENUE $3 million GREW UP Findlay, Ohio RESIDES Hudson Yards neighborhood EDUCATION Bachelor’s in political science, Ohio University PAST WORK Before joining Out Leadership in December, Frederick was the executive director of NYC Pride for 10 years. He helped raise funds, develop programs and manage events, including the first World Pride celebration, in June 2019, which attracted 5 million attendees to New York City. REACHING A NEW GENERATION “The impact of connecting with the program—feeling inspired and part of a community that you maybe didn’t know you were part of—is life-changing,” Frederick said. “There’s a lot to be said about the virtual space allowing people to live their truth.”

You plan to continue virtual programming going forward. How will you incorporate it into your model? In-person events will still exist, but the virtual side of things has so many advantages and allows us to greatly increase the interactions our members have with our organization. It’s exciting to be able to create programming that affects everyone on a more frequent basis. It’s the future of Out Leadership.

During Pride Month, you will debut the results of a new research program, AllyUp, which looks at the power of LGBTQ allies and how to attract their support. Why is that important?

We are reaching beyond the LGBTQ community to allies. In the workplace, that component is often overlooked as a key driver in moving the equality narrative forward. The research sheds light on what it means to be an ally. If we can bring them along to help advocate as a community, it’s for the better. If we open up to more people, that message sings loud and clear about what we are trying to accomplish.

all over the world and trying to make sure it’s not U.S.centric. We have programming that focuses on various areas of the world and a snapshot of equality in different regions.

The events are free, and speakers are donating their time. How are you financing Proudly Resilient?

We’re doing it all ourselves. We’re hopeful that we can get support for creating this kind of free offering that we can build year over year. A lot of programming could be created that impacts more people. That’s what Pride’s about: how to grow these ventures to inspire more people to inspire more change. ■

BUCK ENNIS

CHRIS FREDERICK Out Leadership

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JUNE 8, 2020 | CRAIN’S NEW YORK BUSINESS | 11

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WHO OWNS THE BLOCK

400-470 KENT AVE.

Big bet on a revamped waterfront Developers double down on their Williamsburg riverfront gamble BY C. J. HUGHES 325 KENT AVE. This 522-unit rental was the first building to open at the $1.5 billion Domino sugar refinery redevelopment site. The five-building, 11-acre mega-project from Two Trees Management calls for apartments, shops and offices. A 6-acre public park is also part of the project. The waterfront site by the Williamsburg Bridge, which includes a smokestack-topped brick building that’s protected as a landmark, last refined sugar in 2004.

420 KENT AVE. Developed by Spitzer Enterprises, the development firm helmed by former governor Eliot Spitzer, this shimmering two-towered, 857-unit rental complex opened in 2019. Formerly a Schaefer brewery site, it also once housed a yeshiva for the neighborhood’s significant Orthodox Jewish population. One-bedrooms start at $3,637 a month.

400 KENT AVE. Giando on the Water, a window-lined Italian restaurant popular as an event venue, has occupied this Manhattan-gazing site since the 1980s. It is one of the few properties to not change hands in recent years, but brokers say it is regularly the target of a barrage of offers.

429 KENT AVE. This 216-unit full-block condo complex, which takes up 2 acres once owned by the F.&M. Schaefer Brewing Co., was developed by Xin Development Group International, an arm of Xinyuan Real Estate Co. But since the Chinese firm left the U.S. in 2017, Kuafu Properties has managed the project. Six years after marketing began, the complex is still not sold out. The least expensive unit on the market on June 1 was a one-bedroom for $960,000.

446 KENT AVE. Schaefer Landing, a three-building condo-and-rental complex on the site of a former Schaefer brewery, was among the first glassy high-rises to appear on the Williamsburg waterfront when it opened in 2006. Two buildings at the project, which was built by a team led by BFC Partners, offer condos; the third building has below-market rentals.

475 KENT AVE. A company named La Rosa once made pasta in the 11-story building at this address, which in 1998 became a legal live-work loft for artists. A fire in 2008 that began in a matzo bakery in the basement led to temporary evictions. The landlord, Sheila Properties, sold the 103-unit property for $56 million to Israeli investors in 2017, according to reports.

470 KENT AVE. Naftali Group, a luxury-housing developer, purchased this industrial post-Schaefer site, owned by brothers Isaac and Abe Rosenberg, for $102 million during the spring. A previous effort by the Rosenbergs to convert it into housing, an 800-unit undertaking known as Rose Plaza on the River, never broke ground despite getting residential zoning in 2010.

BROOKLYN NAVY YARD The Navy Yard is a 300-acre complex where the World War Two–era battleship USS Missouri was among the vessels built. The Navy Yard fell on slow times in the late 20th century, but in the past decade it was reinvented as a hub for startups. A $2.5 billion plan announced two years ago would add 5 million new square feet and lease it to tech companies. A Wegmans grocery store opened there in October.

BUCK ENNIS, GOOGLE MAPS

s the developer the Naftali Group completes the purchase of a longtime lumberyard on the East River in Williamsburg, a waterfront once thick with factories is losing one of its last major industrial sites. The $102 million purchase of a 2-acre parcel at 470 Kent Ave., which can fit 475,000 square feet of apartments between South 11th Street and Division Avenue, appears to be the largest transaction of its kind since March, when real estate markets seized up. But the deal, which has been in the works since 2018, may say more about the past than the present. In some ways it’s a culmination of an effort that began more than a decade ago, during the Bloomberg administration, to boost housing at the expense of manufacturing. Indeed, in 2006 the city approved a sweeping 184-block rezoning of the Williamsburg and Greenpoint waterfront, where breweries and sugar refineries long held sway, to make way for luxury high-rises. Although Bloomberg rezoned 40% of New York between 2002 and 2014, the Williamsburg transformation, stark and highly visible, is perhaps the mayor’s most familiar legacy. The Naftali site, home now to Lumber Certified/Boro Park Lumber & Home Center, brushes up against the rezoned strip. Although some critics have taken issue with the density of the new waterfront, which has added tens of thousands of new residents, and the scale of the towers, some of which soar to 40 stories, real estate executives call the makeover a win. “The rezoning changed everything,” said Neil Dolgin, the co-president of Kalmon Dolgin Affiliates, a 116-yearold commercial brokerage in a former Williamsburg shoe factory. “And it’s been a net positive, absolutely.” Successful urban planning, however, hasn’t totally protected the area. The average price of condos, co-ops and houses that went into contract in Williamsburg in the second quarter through May was $1.2 million, the research firm GS Data Services found. That is down from $1.4 million in the year-ago period, or a drop of 13%. But brokers say three NYC Ferry stops could serve the area well in the post-pandemic era, when some commuters are expected to shun the subway. Naftali’s chief executive, Miki Naftali, whose Brooklyn developments include rentals such as the glassy 200 Franklin St. in Greenpoint, said there’s no design yet for Kent Avenue, which won’t open until 2024. But he’s betting on the area’s longterm appeal. “New York City will come out of this crisis stronger and better,” he said, “just as we have done in the past.” ■

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Private-equity firms readjust to changing landscape amid pandemic As lockdowns lift, new deals may increase, but with careful calculations

hile private-equity firms are flush with a record $1.45 trillion in dry powder, acquisitions slowed as the Covid-19 pandemic sent the U.S. into lockdown and brought business travel to a halt. At the end of the first quarter of this year, privateequity deals were down 21.68% year over year, S&P Global Market Intelligence found. As firms reckon with new variables and questions stemming from the coronavirus crisis, the next steps for private-equity investors lack clarity. For the time being, firms will have greater difficulty with valuation, less debt financing will likely be available, and portfolio companies will need extra attention, said Michael Schwamm, a partner at Duane Morris LLP who specializes in middle-market mergers and acquisitions.

z Diligence becomes more challenging Perhaps the biggest obstacle standing in the way of new deals since the pandemic has been the logistics of doing business. Lockdowns and grounded planes make it a challenge—in some cases an impossibility— for firms to complete due diligence.

z While many companies have embraced

the tools of remote work, technology has its limits. “You can do all the stuff that’s paper-driven. You can do some presentations over Zoom,” said Schwamm. “But nothing ultimately replaces face-to-face meetings. Nothing

replaces physically kicking the tires and physically meeting the people.” It’s too soon to say when buyout activity will ramp up again. But in the parts of the country that have reopened, Schwamm said, some deals are moving forward.

z Long-term consequences are

a question mark One of the complicating factors facing private-equity firms is the pandemic’s long-term effects. It’s hard to say which industries and companies will be irreversibly affected, and which will recover—and when.

New York City office real estate is a case in point. Employers may realize they can do without big, expensive office spaces because

they have learned their employees can work efficiently from home. But for workplaces where people do need to come to an office, employers may decide they need even more space to avoid the close contact that allows viruses, such as Covid-19, to spread easily. It’s also possible that once people feel comfortable returning to public life, they will fully revert to their pre-pandemic behavior. “The wild card is how short our memories are,” Schwamm said. “Two years from now, will we go back to what we did before? Or will this really cause a fundamental change in the way people behave?” These questions can make it difficult to know which companies are worth investing in. If the pandemic does lead to lasting behavioral change, perhaps a company that organizes large conferences is not a wise investment. But if conferences make a comeback once people feel safe again, now could be the time to acquire a conference organizer at a bargain.

z Opportunities emerge However uncertain the coming months appear, Schwamm said, firms will have opportunities to snap up struggling companies.

“I would expect you’ll see new distress funds pop up, or you’ll find some funds pivoting more to the distress market,” he said. In the middle market, Schwamm expects firms to focus on acquiring companies that complement their existing portfolio companies; this approach is both less expensive and less risky than taking over new platforms. He expects to see more deals involving earnouts, in which the acquisition target must meet certain financial targets before the seller receives full compensation. Earnouts are a particularly useful tool as banks issue less debt financing for the highly leveraged deals that many private-equity firms prefer. As private-equity firms seek attractive new deals, many will focus on fortifying their holdings. “Firms are probably reserving more cash to support those portfolio companies,” Schwamm said. “They have companies that are doing well, and some that just aren’t fixable. And then you have the largest bucket—the companies that they think are sustainable, but need time, energy and money to turn into winners.”

JUNE 8, 2020 | CRAIN’S NEW YORK BUSINESS | 13

INSTANT EXPERT

Everything you need to know about reopening the economy BY GWEN EVERETT

While every other region in the state got back to business, New York City sat and waited—its own reopening mired for weeks in mixed messages from the state and the local government. Now the Big Apple is ready for its grand re-entrance. June 8 marks the beginning of phase one of the economic restart, three months after the governor and the mayor ordered nonessential businesses to shut down to stop the spread of Covid-19. About 400,000 workers will flood back into the city. Construction, manufacturing, agriculture, wholesale trade and curbside retail will return. The hallmark industries, such as real estate and finance, will not be back in the office until phase two. It won’t be until then that storefronts can open their doors for in-person, socially distanced shopping. But it will be a long road back to normalcy. Businesses that reopen now have to conduct health checks, hold off on in-person meetings, place markers to enforce social distancing and provide face coverings for employees.

Gov. Andrew Cuomo made it clear that he is the only one with the power to lift the lever on New York’s reopening. His June date preempted Mayor Bill de Blasio’s tentative start date by a week. The top health adviser in New York City, Dr. Oxiris Barbot, gave the reopening her blessing but urged caution and social-distancing precautions even as the city restarts. President Donald Trump has been an unpredictable factor throughout the reopening process. After initially pushing for the country to reopen by Easter, Trump also threatened to force states to end their lockdowns. Ultimately Trump settled on a patchwork approach that allowed states to make the final call. New York City is reopening nearly two months later. Transportation will be a major issue. Patrick Foye, the head of the MTA, offered weak comfort. Subways are a safe way to get around the city, he maintains—while also saying businesses that can let their employees work remotely should.

CUOMO

DE BLASIO

BARBOT

TRUMP

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THE PLAYERS

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THE ISSUE

FOYE

YEAH, BUT …

City officials now have to monitor seven metrics, including hospital bed capacity and the infection rate. If any of those barometers rise past acceptable levels, the reopening will freeze. If all goes well, the city will follow in the footsteps of the regions ahead of it. For them, it’s already proving to be a bumpy road. Cuomo seemed to revoke the start of phase two, which includes professional services, before reinstating it for five regions. Which businesses fall under which phase is a moving target. Cuomo recently shifted outdoor dining, previously siphoned into late-stage reopening, to phase two. Not coming along with the retail opening in phase two are malls, gyms, casinos and movie theaters.

IT’S A LONG ROAD, BUT IF ALL GOES WELL, THE CITY WILL FOLLOW IN THE FOOTSTEPS OF THE REGIONS AHEAD OF IT

Protests and civil unrest over the killing of George Floyd have totally eclipsed the pandemic. Both anger over Floyd’s death and the economic frustration that has built up during the shutdown may be fueling the widespread looting that has taken place at night in multiple boroughs. New Yorkers must make the choice between Covid-19-related safety guidelines and rallying against racially biased policing. The protests are the first mass gatherings the city has seen in months and threaten to spark a resurgence in coronavirus cases. New York also needs to figure out how to safely transport thousands of commuters across the city. More trains will run during operating hours once phase one begins. The authority will offer face masks, required to board a train, and hand sanitizer at stations.

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WHAT’S NEXT

SOME BACKGROUND

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Now that the time has come to begin the reopening process, businesses will face a number of requirements. Retail shops and construction sites alike will have to provide face masks to their workers and ensure employees keep 6 feet apart. They’ll also have to operate at half-capacity. De Blasio says the city will launch a restart hotline to advise businesses and have teams on the ground to help firms get in line with reopening mandates. Cuomo has insisted that these guidelines will define the reopening, which he also has insisted that only he has authority over. Eventually, he and the mayor came together to give the process the green light.

14 | CRAIN’S NEW YORK BUSINESS | JUNE 8, 2020

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CORONAVIRUS ALERT

Tracking Covid-19 in New York BY GERALD SCHIFMAN

New York City is the epicenter of the Covid-19 outbreak in the United States. Crain’s is tracking the growth of the virus in the five boroughs and the surrounding counties. The figures below are as of Thursday, June 4.

DAILY HOSPITALIZATIONS

POSITIVE CASES

Weeks ago the state reported that a projected 110,000 hospital beds would be needed during the virus’ peak. With roughly 50,000 beds in operation, New York’s health systems would have been overwhelmed. But as social-distancing measures have driven the apex downward, hospitalization totals are decreasing, albeit at a slower rate than the initial ascent.

On March 22, Gov. Andrew Cuomo enacted New York Pause, which closed all non-essential businesses. With the virus already spreading throughout the downstate region, the Covid-19 caseload skyrocketed in the weeks to come before slowing in late April. The city and suburbs are now adding fewer than 1,000 new coronavirus diagnoses each day. 250,000

20,000

New York City

Long Island

Lower Hudson Valley

15,000

205,406 150,000 10,000

80,866 5,000

2,849 326

50,000

0 March 16

June 3

+50

499

0 March 3

June 3

MINIMUM AMOUNT by which hospitals needed to increase capacity

NUMBER of Covid-19 patients currently in intensive-care units at city hospitals

62,748

PORTION of the state’s positive cases that are in the city

375,133

NUMBER of positive cases in the state, the most in the country

TESTS CONDUCTED

DISTRIBUTION OF CASES BY BOROUGH

The Food & Drug Administration granted approval to private labs to screen for Covid-19 on March 13. New York now has the capacity for approximately 40,000 tests per day. A full economic reopening will require widespread access to tests, including reliable serology exams.

Queens has the most confirmed positive cases in the city. When the numbers are restated on a per-capita basis, however, the Bronx emerges as the hardest-hit borough. Staten Island

1,200,000

New York City

Long Island

Lower Hudson Valley

Queens

1,051,519 7% Manhattan 13%

30%

800,000

395,323

22%

400,000

326,055

The Bronx

28% Brooklyn

0 March 3

June 3

PROPORTION of New York’s population that has been tested

24,133

NUMBER of deaths from Covid-19 in the state

PORTION of state Covid-19 fatalities in which patients had preexisting conditions ISTOCK

PORTION of state tests that have resulted in positive cases

1 in 8

NOTE: Lower Hudson Valley includes Dutchess, Orange, Putnam, Rockland and Westchester counties.

SOURCE: State Department of Health

FOR THE MOST UP-TO-DATE COVID-19 STATISTICS, VISIT CRAINSNEWYORK.COM/TRACKING-CORONAVIRUS-NEW-YORK. JUNE 8, 2020 | CRAIN’S NEW YORK BUSINESS | 15

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CORONAVIRUS ALERT

‘Massive expansion’ of outdoor dining coming to city in July

ayor Bill de Blasio said last week that the city’s world-class food scene will reopen next month and promised a large increase in outdoor dining to revive restaurants devastated by the pandemic. “We will provide a massive expansion of curbside seating, a big expansion of open streets,” the mayor said. “We will do what it takes to help this key part of life in New York City.” Although the mayor revealed only limited details of the plan, his commissioners provided additional details during a City Council hearing on restaurants.

Parking spaces Under the plan, restaurants will be able to convert parking spaces and plazas without a permit, said Polly Trottenberg, de Blasio’s transportation commissioner. The review process for sidewalk dining and eating areas on closed streets

also will be accelerated, she said. The Department of Transportation has closed off 45 miles of streets from traffic since the start of the pandemic. It has committed to closing 100 miles from traffic. Sidewalk dining permits typically require review by multiple city agencies, the City Council and the local community boards. The process can take up to a year or longer, but Trottenberg vowed to skip parts of it to speed things up. “You are all wanting us to help 27,000 restaurants in three weeks,” Trottenberg said. “We are not going to be able to bring these all to the community boards. That’s the trade-off.” The city must balance the need to provide restaurants support quickly with “how much oversight and process everyone feels comfortable with,” she added. The City Council is reviewing legislation that would require the city to set aside additional street spaces and sidewalks for outdoor dining. The bill, from Speaker Corey Johnson and Councilman An-

tonio Reynoso, also would require the city Department of Health to set rules for proper social distancing during the service of customers outdoors. The clock is ticking to give restaurants tangible guidelines. Outdoor dining will be allowed through the second phase of economic reopening, Gov. Andrew Cuomo announced last week. The city will begin phase one this week and could reach the second phase by early July, de Blasio said.

Not universal The plan will not be universal across all neighborhoods. Some businesses on Arthur Avenue in the Bronx, for example, have indicated that they would rather keep their parking lots open than turn the spaces over to outdoor dining, Trottenberg said. Peter Madonia, chairman of the business improvement district that represents Arthur Avenue, said he is glad the city will consider a neighborhood-focused approach. A majority of the customers of Ar-

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BY RYAN DEFFENBAUGH

thur Avenue restaurants and retailers arrive by car, he said, so that fact must be balanced against the need to add outdoor capacity. “We have retail that is open during the day, restaurants that have to accommodate customers at night, and a client base that is regional and drives here,” said Madonia, who runs a family bakery on the avenue. “Those are the things we are trying to calibrate when we think about how to help our restaurants through street closures.” Council members expressed

Sponsors:

WEBCAST

Life After Covid-19:

concerns that the plan will not address the needs of outer-borough neighborhoods, where outdoor dining is less common. The question of how the city will handle noise complaints was raised. “If I have large crowds outside restaurants at 10 at night, I’m going to get calls,” said Councilman Andrew Cohen, who represents parts of the northern Bronx. Trottenberg said the city would use a “light touch” on enforcement. ■

OPENING KEYNOTE: Dr. Oxiris Barbot, MD

Commissioner, New York City Department of Health and Mental Hygiene

PANELISTS:

How the pandemic will change health care June 16, 2020 | 11 AM – 12 Noon What long-term effects will Covid-19 have on health care in the tri-state area? Top health care professionals discuss their biggest takeaways from the pandemic and what they foresee happening in the future.

Louise Cohen, MPH Chief Executive Officer, Primary Care Development Corporation (PCDC)

Dr. Jacqueline Delmont, MD MBA

Chief Medical Officer, SOMOS Innovation, LLC

MODERATOR: Fred P. Gabriel, Publisher/Executive Editor, Crain’s New York Business

Karen Ignagni President and Chief Executive Officer, EmblemHealth

Dr. Adam Reed Stracher, MD

Chief Medical Officer and Director of the Primary Care Division, Weill Cornell Physician Organization

16 | CRAIN’S NEW YORK BUSINESS | JUNE 8, 2020

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BHAVSAR accuses Hoerle-Guggenheim of using the Guggenheim name to curry credibility within the art industry.

ARTIST FROM PAGE 3

his own pieces, said Steven Giordano, the artist’s lawyer. Hoerle-Guggenheim’s gallery, HG Contemporary, has yet to return 35 of the 42 works it consigned, which collectively are worth more than $2 million, though its contract with Bhavsar ended in January 2019, the lawsuit says. “I think that Philippe won over [Bhavsar’s] trust,” Giordano said. “Based on that trust, my client turned over over $2 million worth of artwork to somebody who abused that trust.” The artist has had a little more luck retrieving money for the few pieces that Hoerle-Guggenheim sold. After Bhavsar received a partial payment of $40,000, the next check from the gallery bounced, the lawsuit claims. Bhavsar has seen no payments since, even though Hoerle-Guggenheim sold another one of his works—months after his contract was over—for $54,000, the lawsuit alleges.

‘Just a gaffe’ Hoerle-Guggenheim is no stranger to controversy. Claims of financial wrongdoing have followed him in recent years. He was sued in 2017 by an employee who said he had failed to pay her for months, then again in 2019 by two California collectors who paid Hoerle-Guggenheim half a million dollars for a Renoir that he did not deliver. That lawsuit was settled, but controversy reemerged later that year, when an artist whom Hoerle-Guggenheim represented pulled out of a show and ended his contract at the gallery, citing distrust of the dealer. None of those public scuffles have slowed the dealer, whose gallery represents 32 artists and holds blue-chip works by Banksy, Andy Warhol, Jeff Koons, Pablo Picasso and Salvador Dali, according to its website. He flies to New York, Los Angeles and Europe to court clients and pitch sales. Discussing his failure to return the works, Hoerle-Guggenheim told Crain’s, “It was just a gaffe.” He

said he plans to return Bhavsar’s pieces, which are in California and Madrid. “It was really mainly because of the Covid situation. I had no desire or no intention to keep the works. You know, a lot of them are in Madrid,” said Hoerle-Guggenheim, adding it was difficult getting employees into Spanish facilities to ship works during the Covid-19 shutdown. Madrid was among the European cities most affected by the coronavirus. Hoerle-Guggenheim has promised before to return the pieces without doing so, Giordano said. “The idea that he’s going to use the coronavirus as the sole excuse for why he hasn’t returned works of art doesn’t explain the year and a half where he was supposed to return them,” Giordano said. “That should speak volumes.” Hoerle-Guggenheim's attorney, George Benaur, declined to comment. It’s part of a pattern of behavior that other artists, such as Louis Carreon, a contemporary artist from Los Angeles, said they recognize from their experiences with Hoerle-Guggenheim. The Guggenheim name continues to be a point of confusion for the artists and collectors he works with. The art dealer says he is a distant relative of the famed Guggenheim family, which founded the New York City museum. Bhavsar accuses him of using his name to curry credibility. “Philippe Hoerle-Guggenheim claims to be a ‘distant relative’ of Solomon Guggenheim. He fashions himself as an expert in fine art,” the artist charges in the lawsuit. “However, [he] is none of these things.” The Chelsea dealer says he tells people he is a distant relative to clarify, not obscure, the matter. “People always ask me what’s my relationship, and I say it’s a distant one,” he said, balking at the idea that the relationship is entirely fabricated. “It’s not like the last name Smith. My mother’s maiden name is Guggenheim.” The American side founded the museum, he said, adding: “It’s one big family. I’m from the French side.” ■

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BED-STUY SHOP OWNERS SUPPORT PROTESTS BUT BRACED FOR VIOLENCE

LOOTING FROM PAGE 1

The police declined to comment about the business owner’s charges. As of last Friday, 631 looting and vandalism complaints citywide had been filed with the police department. Eventually, the city reined in the looting after days of unrest. One hundred ninety of the city’s biggest businesses, including Macy’s, penned a letter through the Partnership for NYC supporting the protests but condemning the looters. “When a public event along the lines of the killing of George Floyd occurs, we have always believed that the collective voice of the business community needs to be part of the public outcry for change,” said Kathy Wylde, president of the nonprofit, which consists of CEOs from the city’s tip corporate and investment firms. New York-based Warner Music Group donated $100 million to social justice organizations in light of the protests.

Breakage Owners of vandalized and ransacked shops in SoHo, the West Village and Midtown criticized the looters, accusing them of ex-

cers, Police Commissioner Dermot Shea said. In addition, de Blasio moved up the city curfew to 8 p.m., a move that stemmed large-scale raids, although clashes with the police and protesters continued. The damaging of property distracts from the message at hand, Gov. Andrew Cuomo has said repeatedly. “When you are violent, it creates a scapegoat to shift the blame,” he said. But some businesses see the looting as a more complex issue. “I don’t agree with stealing of any kind,” said Tiecha Merritt, the owner of the Bush Doctor Juice Bar and president of the Tompkins Avenue Merchants Association in Bedford-Stuyvesant. But looters who target the country’s biggest corporations, she said, may be trying to get the country’s attention on an issue they have been silenced on for decades, Merritt said. “If they destroy Macy’s and stuff,” she said, “that’s going to get national attention.” “Once corporate America starts seeing their things destroyed, they’re going to start calling politicians,” Merritt said. “My question is, ‘OK, if the protest is peaceful, would it have gained as much national and worldwide attention?’” While some criticized the NYPD response at times as being overly aggressive, the mayor said that the police successfully demonstrated “tremendous restraint” in the past week. The NYPD did not respond to requests for comment about their response. Cuomo assailed the NYPD in the early part of last week for not being aggressive enough on looters.

IN A CITY AS LARGE AS NEW YORK, sometimes it takes a community to understand a crisis. Minority business owners on Tompkins Avenue, one of the most diverse commercial corridors in Brooklyn, expressed support toward the protests that have erupted across the city in response to the treatment of African Americans by police officers. “They tried to take the knee, they tried peaceful protesting, and they just aren’t being heard,” said Tiecha Merritt, president of the Tompkins Avenue Merchant Association and owner of the Bush Doctor Juice Bar. “The final straw was what happened to George Floyd.” Merritt is a 12-year resident of Tompkins Avenue, the thriving commercial sector at the heart of Bedford-Stuyvesant. Bordered to the south by Fulton Street and to the north by Quincy Street, the strip of Tompkins Avenue is home to a thriving minority-owned small-business district, one that includes 15 shops owned by African American women. The business group's members include grocers and owners of restaurants, clothing stores, salons and yoga studios. “It’s probably the most heavily trafficked area in Bed-Stuy,” said Michael Brooks, owner of BedVyne Brew. “It’s an area the people from here have been at for a long time and people who are new to the area appreciate. It’s very diverse on the strip.” Merritt, who opened her juice bar in 2008, has seen the change firsthand. She watched the neighborhood rise from the blight of empty storefronts to become the nexus of a community that hosts events and festivals for all people—black, white, Asian and Latino. While she welcomes the additions and the increased business activity, Merritt blames rising rents for pushing out the neighborhood’s African American community. “Bed-Stuy was mainly a black neighborhood. Then gentrification came,” she said. African American business owners on Tompkins Avenue shared their opinion on the protests, a perspective complicated by the civil rights issue at the heart of the marches. “It’s troubling because for many of us, we’re on the fence for both,” explained Oma Holloway, senior program director at Bridge Street Development Corporation. “We’re organizations and businesses, and we’re people of color who are just as angry and frustrated.” Holloway is one of the neighborhood leaders concerned the protests sparked by Floyd’s death could endanger storefronts and the safety of small-business owners. Holloway’s Bridge Street Development Corporation promotes homeownership, youth workforce programs, affordable housing and senior service centers. She emphasized the need for the protests to produce lasting change in the neighborhood if they are to be worthwhile. “We don’t want to see our communities destroyed or people harmed, but we also want to move toward a solution,” she said. Brooks and Merritt, who are both African American, offered different perspectives on the goals of the protests and the threat disorganized anger could pose for the neighborhood’s business community. “I’m not for the looting of private property and the violence, but at the same token, what can you do? You tried everything else,” Merritt said. “There has to be real reform. The only way the government can hear you is through violence.” Brooks disagreed. “The more peaceful the protest, the more productive things can get. Violence begets violence,” he said. “All it does is inflict more pain on minorities.” A march on Fulton Street last Monday caused anxiety for those living only a few blocks away. Holloway, who recently moved back to Bed-Stuy, highlighted the threat of violence spilling into the neighborhood. “We rent a space above a small business, and I need to get my daughter because I don’t know what will happen,” she said. “I need to make sure my daughter and I are somewhere safe.” By week’s end, the marching through Bed-Stuy remained peaceful. — B.P.

“OUR JOB WAS TO SHOW PEOPLE THAT POLICING WOULD BE RESTRAINED”

Shopworn “The NYPD and the mayor did not do their job last night,” Cuomo said last Tuesday. The destruction happened the same night Cuomo and de Blasio imposed the first curfew on the city in more than 50 years and doubled the police presence on the ground. “It was a disgrace,” the governor added. He later tried to walk back his criticism of the police. In light of protests, Comptroller Scott Stringer, the city’s top financial watchdog, called on de Blasio to cut the police budget of nearly $6 billion by $1.1 billion in the next four years. The Citizens Budget Commission supports cuts on fiscal grounds; multiple City Council

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ploiting the moment. Some said the damage they were seeing would delay them from reopening after Covid-19, the other crisis the city was facing before George Floyd’s death rocked the nation. Alphabet City Beer Co., a small East Village business, suffered $2,000 in damage and theft. The perpetrattors stole cash, oat milk and orange juice—but, oddly, no beer. The craft beer shop had to stay closed for days waiting to get the police report it needed to file an insurance claim. The state Department of Financial Services, however, stepped in on Thursday, to waive the police report requirement. Mayor Bill de Blasio launched a fund for Bronx businesses that gives $10,000 grants to stores damaged by looters. After last Monday’s looting, police arrested around 700 in connection with thefts and attacks on offi-

members back cuts for political and fiscal reasons. But that’s a move de Blasio’s never been willing to make before. If cuts are made, they will be made only because of the fiscal crisis, not as a political statement or a policy change, he said. “The mayor lives in fear of the

NYPD, its police commissioner and its union,” Queens Councilman Rory Lancman, who heads the Justice System committee, said. The ample budget did little to equip the department to respond to the store ransacking the nights of May 30 and June 1, Lancman said. The mayor, however, defended

the department’s response as a more enlightened form of law enforcement. “Our job was to show people that policing would be restrained, but still effective,” the mayor said. “Our job was to figure out strategies that would work. ... We had to strike a balance.” ■

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RETAIL

BY RYAN DEFFENBAUGH

&M owes $4 million in unpaid rent on its Herald Square flagship store, a landlord claimed in a lawsuit filed last week. The Herald Square location, H&M’s largest globally when the company signed the lease in 2013, costs roughly $1.2 million in monthly rent that the Swedish retailer has not paid since March, according to court documents filed by landlord JEMB Realty. Other unpaid operating and utility costs for the 63,000-square-foot store at 1293 Broadway date to

the fast-fashion outlet pay its outstanding rent and is seeking legal fees from the company. Attorneys for both H&M and JEMB Realty did not immediately respond to requests for comment on the lawsuit.

A new trend JEMB Realty is not the only landlord seeking money from the retailer. H&M paid none of its rent in the U.S. for April and May, according to estimates from Datex Property Solutions. The retailer has 17 New York City locations, according to the Center for an Urban Future. In Britain, H&M angered property owners by asking for rent forgiveness and threatening to exit leases early, Bloomberg reported. “This is an extreme situation,” an H&M spokeswoman told the outlet. “All activities in the company are now being carefully evaluated, including costs and risk perspective.”

“THIS IS AN EXTREME SITUATION. ALL ACTIVITIES ARE BEING EVALUATED” 2014 and place H&M’s total debt to the landlord at $4.2 million, the lawsuit alleges. JEMB Realty has asked a state Supreme Court justice in Manhattan to declare that

National chain retailers paid about 45% of total rent due within the first week of May, according to figures from Datex Property Solutions. The firm tracks payments to its landlord clients from retailers that pay at least $250,000 in annual rent for 10 or more properties. Gap and Brooks Brothers also have been sued by Manhattan landlords in recent weeks in connection with unpaid rent. State courts reopened for nonessential matters on May 25, opening up the possibility of additional landlord-tenant disputes. L Brands sued SL Green the day courts reopened, seeking to break leases for Victoria’s Secret and Bath & Body Works at separate Midtown buildings owned by the landlord. Attorneys maintain, however,

BLOOMBERG

H&M sued for $4M in unpaid rent at Herald Square flagship

that most tenants and landlords are handling rent disputes internally, such as through negotiating concessions or new payment terms. “Commercial tenants don’t want

to risk losing their leases, and landlords don’t want to risk vacant space,” said Scott Mollen, a partner in the real estate group for the law firm Herrick. “Everyone has an incentive to work things out.” ■

What’s Next for New York? In the special “New York Next” issue on June 29, Crain’s New York Business will highlight the people and businesses who are helping the greatest city in the world get back on its feet after the Covid-19 pandemic. This highly read keepsake issue will include personal stories of tragedy and triumph from leaders across health care, real estate, hospitality, banking and other industries that call the city home.

Contact Lisa Rudy at lrudy@crain.com for more information. Don’t wait! Reserve your space by Thursday, June 18.

JUNE 8, 2020 | CRAIN’S NEW YORK BUSINESS | 19

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CORONAVIRUS ALERT

BY JENNIFER HENDERSON

rimary care doctors’ practices focus on the preventive care that keeps patients healthy. Many of them are small but punch above their weight in providing access to services in underserved communities. A series of new surveys by researchers at NYU have found that the city's primary care practices have been particularly hard hit by the pandemic. Many of them worry they may not come out on the other side. Initial survey results collected in mid-April yielded responses from nearly 500 practices across the city and revealed that the Covid-19 crisis has had a severe impact on 85% of them, NYU said. The most common sources of stress included shortages of personal protective equipment, which 53% of respondents reported. Nearly half noted strain from large volumes of patient calls, and 42% reported struggles with staff illness. For practices that remained open,

more than half of patient visits were completed via video or telephone, the researchers found. However, some providers were unsure whether they would be reimbursed for them.

The other frontline workers In the most recent iteration of surveys, completed May 21, more than 120 practices responded, and 72% said that they were detrimentally affected by the crisis. More

Though many primary care practices have applied for various loan and grant programs to help ease some of the financial strain, there is concern they haven't been a priority for federal relief. “We all understand that the crisis is at the hospital level, but what’s remarkable is that in the midst of this overwhelming crisis of hospitalizations, people were forgetting there are other frontline health care workers, and they’re called primary care doctors and nurses,” said Dr. Donna Shelley, professor of public health policy and management at the NYU School of Global Public Health, who is leading the research. The Medical Society of the State of New York also noted that more federal funding is needed to support physician practices during the pandemic following its own survey. And even large practices have noted the high costs of obtaining PPE. Shelley and her colleagues are working with NYU Langone Health

“SMALL COMMUNITY CLINICS ARE COMPLETELY FORGOTTEN” than 60% of respondents cited decreases in revenue as a severe source of stress. “It is frustrating because small community clinics are completely forgotten,” one practice from Brooklyn responded. “We don’t get funds, and insurance carriers pay peanuts for televisits—that is, if they choose to pay.”

ISTOCK

Small doctors fear they won’t survive the pandemic

as well as the city Health Department on the research. NYC Reach, a program at the Health Department that assists primary care providers, has collaborated with NYU to assess Covid-19related challenges and needs. Since the pandemic began, the program has worked with small, independent practices on adapting to state and federal regulations for the reimbursement of virtual services and utilizing other health care incentive programs. The goal of the surveys is to gather data on the evolving needs of primary care practices and to put together actionable data that could help support them during and after

the pandemic, Shelley said. Additional support could ensure that they have a greater role should another health crisis emerge. She calls the primary care practices collectively the “silent safety net.” “If 50% shut their doors, they worry that their patients would have nowhere to go,” Shelley said. One practice responded that members of its staff can speak four African languages, an essential part of providing quality care to the patients it serves. “Primary care is the foundation of our health care system,” Shelley said. “We have underinvested in it for decades.” ■

NOMINATIONS OPEN Crain’s New York Business will highlight Notable omen in ccounting and Consulting, which will publish as a section within Crain’s New York Business in the September 28 issue. This feature is a celebration of women e ecutives working in accounting and consulting who have impacted New York City in ma or ways and honors their professional, civic and philanthropic achievements.

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20 | CRAIN’S NEW YORK BUSINESS | JUNE 8, 2020

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CORONAVIRUS ALERT

BY RYAN DEFFENBAUGH

“That’s largely driven by Amazon, Google and Facebook.”

s many city startups have struggled in the pandemic economy, tech giants have kept up their rapid pace of local hiring. Amazon, Google, Facebook and Microsoft each have added at least 100 New York staffers between April 1 and June 1, according to an analysis by ON Partners, a technology recruiting firm. The firm’s assessment, which re-

Job listings Glassdoor found listings in the technology industry climbed 47% in May, compared to the same month last year, despite new job listings dropping 21% overall. “Some companies are really facilitating how people are living today, such as e-commerce, software for remote work and digital entertainment,” said Sacha Zarba, a vice chairman at CBRE who works with technology firms. “When we start to come out of this, it is not as though the need for those services will cease.” Technology companies represented 25% of all of Manhattan’s office leasing last year—the first time the industry outpaced financial services. But even as larger firms maintain

“A NUMBER OF TECH STARTUPS COULD RUN OUT OF CASH AND SHUT DOWN” lies on LinkedIn postings, found that total tech jobs in the city increased by about 1% in the past two months, despite record unemployment claims. “I did not expect to find that,” said John Barrett, a partner at ON.

hiring, smaller startups have struggled, particularly those focused on hospitality, entertainment and other industries shut down by the pandemic. “A sizable portion of the city’s tech companies are experiencing dramatic declines in sales and being forced to delay product launches and cancel fundraising rounds,” according to a report by the Center for an Urban Future. “As a result, many are laying off or furloughing employees. And experts believe that a not-insignificant number of tech startups could run out of cash and shut down operations.” Layoffs are harder to track through Linkedin data, Barrett said. Former employees are slower to update their employment status online when losing a job than when starting one. At least 64 city tech companies have laid off more than 4,500 employees, according to layoffs.fyi, a tracking site launched during the Covid-19 crisis. Technology start-

AP PHOTO

Amazon, Facebook keep hiring as startups struggle

ups have laid off more than 60,000 people nationwide since the start of the crisis, by the site’s tally. An analysis published last month by Union Square Ventures, the city's largest venture capital firm, painted “a dark picture for anyone looking for a startup job at the moment,” said network program manager Matt Cynamon. Union Square’s 83 portfolio companies reduced job listings by 60% between March and the middle of May.

Barrett said there are other midsize city technology companies that have added employees since the start of the pandemic. They include online pharmacy Capsule, software platform Unqork and mobile marketer Attentive. “There are companies that are well-financed through capital funding,” Barrett said. “The majority were lucky enough to raise that money before the coronavirus hit, so they had money to put to work.” ■

Laboratories gobbling up space in pandemic-battered city BY NATALIE SACHMECHI

$2.2B

Steady employment

foot project in West Harlem that broke ground in May 2019, and the Hudson Research Center, which will offer 150,000 square feet of space upon completion. Some floors in the complex are available immediately.

CONSTRUCTION HAS RISEN ALONGSIDE THE STEADY STREAM OF VC FUNDING main campus. Lab tenants also have shown strong interest in building other research sites, such as the Taystee Lab building, a 350,000-square-

$286M

BLOOMBERG

ab space for medical research is a beaker of hope in the city’s wilted real estate market. Demand for life sciences space in the city—which houses 60% of the country’s pharmaceutical industry—is flourishing during the pandemic, with funding and the flow of deals continuing well into the second quarter, according to a CBRE report. At the Alexandria Center for Life Science, a sprawling, 728,000square-foot campus by the East River in Kips Bay, things have been busy. Alexandria leased nearly 20,000 square feet in April to BlueRock Therapeutics, a billion-dollar cell therapy company that was purchased by Bayer in August. Alexandria’s second startup incubator project, LaunchLabs, is still expected to open in the summer at Columbia University in Upper Manhattan. The original LaunchLabs is on Alexandria’s

market demand and capital inflow are positioning the life AMOUNT of sciences indusventure capital try to experiinvested in the ence strong life sciences growth in the industry months ahead, said Steve Purpura, CBRE’s vice chairman AMOUNT specializing in of funding the life sciences the National sector. Institutes Once stay-atof Health is home orders are expected to lifted, Purpura invest by the end expects another of the year surge in activity from pent-up demand for space and requirements related to Covid-19.

ALEXANDRIA CENTER for life science

Steady funding Although much of the 800,000 to

900,000 square feet of laboratory space demanded by tenants was before Covid-19 struck, there has been a surge in response to the pandemic itself, the report found. Construction has increased alongside the steady stream of venture capital funding flowing into the industry, which has already reached $286 million—it’s second-highest year-to-date level on record. Funding from the National Institutes of Health is expect-

ed to break another annual record by reaching $2.2 billion by year’s end. It already had reached $833 million through May 18. “The potential for additional NIH funding being deployed to combat Covid-19 bodes well for continued momentum throughout the remainder of the year,” said Nicole LaRusso, CBRE’s director of research and analysis for the New York tristate region. The continued development,

Employment in the industry also has proved resilient during the crisis. Unemployment levels in scientific research and development were just under 5% for the city, the Bureau of Labor Statistics found, compared with 14% citywide. During the 2009 recession, employment levels fell by 2%, and they bounced up by 5% the following year. Venture capital funding during that period saw a rapid recovery following a one-year decline. At this rate, it’s set to surpass $800 million for the second year in a row. ■

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OUT OF OFFICE

From sushi to gumbo and everything in between BY CARA EISENPRESS

LOBSTER PLACE

s the state begins Gov. Andrew Cuomo’s phased reopening plan, the city’s restaurant industry is contending with two realities at once. Although indoor dining will return as part of phase three, which would take place in late July at the earliest, restaurants are banding together to pass legislation that might help them once their moment comes. In the meantime, more and more eateries are starting to come back, some with creative offerings, others focusing on the familiar.

Danny Meyer’s fast-casual endeavors has reopened to serve neighborhood favorites, including a classic bacon, egg and cheese sandwich; homemade crullers and other sweets; and gourmet groceries and prepared foods. 103 E. 19th St.

BOTTINO 9 a.m. to 7 p.m. Monday through Saturday This Italian restaurant in Chelsea reopened late last month with a new menu catered toward takeout and delivery orders. Its list of sandwiches includes one with soppressata and arugula and another with fresh mozzarella and tomato. There are also starters, salads and cold plates as well as pasta and hot main dishes. The restaurant expects to stay open past 7 in the coming weeks. 246 10th Ave.

DANIEL BOULUD KITCHEN 4 to 8 p.m. Tuesday through Sunday There’s a changing menu of French dishes similar to what’s ordinarily served at the restaurant Daniel now available for delivery and curbside pickup at this location. The menu is $75 for a threecourse meal and includes such dishes as jumbo white and green asparagus with a poached egg, Daniel’s classic beef duo (short ribs and fillet mignon) and opera cake. Since March Boulud has been supporting employees through Hand in Hand, a charity he started. Five percent of the proceeds from takeout sales will now go toward the organization. In April the company brought back a small number of staff to create Food1st, a foundation that made and donated meals for New Yorkers and first responders, with real estate firm SL Green. A weekend package—Friday and Saturday dinner, plus Sunday brunch—is also on offer for pickup at the Southampton and East Hampton Jitney stops beginning June 12 (orders must be placed two days before). 60 E. 65th St.

DAILY PROVISIONS 9 a.m. to 1 p.m. Wednesday through Sunday The Union Square location of one of

FORSYTHIA 4:30 to 6 p.m. Monday through Saturday The chefs at this Italian spot, which will

BEL-FRIES

BEL-FRIES 1 to 8 p.m. daily This downtown potato spot opened last month for the first time. Its menu of fries is made in the Belgian street food tradition—crunchy and served with a variety of toppings, such as pickled onions, and sauces, including truffle mayo and barbecue. The fries are served in a paper cone. The spot will eventually stay open until 4 a.m. 132 Ludlow St.

open at 9 Stanton St. when construction is done and in-house dining is once again allowed, decided to launch early in a borrowed kitchen to serve a handful of takeout dishes. The Roman-influenced menu costs $30 a person and has a choice of two breads, two seasonal antipasti, two primi and two desserts. Diners can choose from such dishes as homemade focaccia stuffed with mortadella, short rib meatballs, fried rice balls stuffed with vegetables and cheese, and a sweet brioche bun brimming with whipped cream. 104 E. Seventh St.

through the website Mercato. 75 Ninth Ave. LURE FISHBAR 3 to 8 p.m. Tuesday through Thursday; 3 to 9 p.m. Friday and Saturday A list of sushi and sashimi is now available for takeout and delivery from this nautical-themed spot. Its signature rolls include the Lure House Roll, made with shrimp tempura and cucumber and topped with spicy tuna. Sushi boxes come with combinations of rolls and edamame, and the kitchen menu offers family-style meals, such as a whole roasted chicken and a double-cut rib eye. 142 Mercer St.

HART’S Orders for pickup from 11 a.m. to 4 p.m. Sundays Hart’s, a Mediterranean restaurant in MAGAZINE BAR Brooklyn, opened an online store for 2 p.m. until dark Monday through Friday; preorders of prepared foods and noon until dark Saturday and Sunday ingredients, wine, spirits and The New Orleans–inspired bar, premixed cocktails. Orders, which opened last year, has MAGAZINE BAR which have to be placed brought out a menu of dishes between noon Friday and that includes chicken and noon Saturday, are then sausage gumbo, creamy ready for pickup during pasta with crawfish tails a five-hour period every and a pork shoulder Sunday. Two restaupo’boy. There are also rants by the same owner, Zapp's chips, frozen HurCervo’s (43 Canal St.) ricanes and free popcorn. and The Fly (549 Classon 130 Franklin Ave., Brooklyn Ave., Brooklyn), have a similar setup on different days of PINEAPPLE CLUB the week. Orders can be placed 3 to 9 p.m. daily on their respective websites. This cocktail bar that was about to 506 Franklin Ave., Brooklyn open when the stay-at-home order took effect is now launching with delivery and takeout on Grubhub and Postmates. LOBSTER PLACE The menu of eight homemade bottled Noon to 8 p.m. daily cocktails includes Fight Milk, made with The fish market and takeout joint in dark rum, pineapple, lime, amaro and Chelsea is selling its famous lobster roll, Campari. There’s also a small list of food, 1.5-pound steamed lobsters and clam including a burger and the fried jerk chowder as well as an extensive menu of chicken. sushi and rice bowls via Toast Tab. Alter509 E. Sixth St. natively, people can buy seafood in bulk

MAGAZINE BAR

B&H DAIRY 10 a.m. to 8 p.m. daily The 82-year-old kosher lunch counter in the East Village reopened for takeout and delivery in late May for orders placed through Door Dash or over the phone. The restaurant is known for its Jewish and Eastern European comfort food, such as matzo ball soup, whitefish salad and pirogies. 127 Second Ave.

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Nominations open to men, women and teams

DO YOU KNOW A HEALTH CARE HERO? Crainâ&#x20AC;&#x2122;s New York Business is continuing to search for outstanding individuals in the health care community within the New York metropolitan area. This year, due to the Covid-19 crisis, Crainâ&#x20AC;&#x2122;s is opening nominations to include men, as well as women and additionally to small teams related to the Covid-19 response.

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