Bank Shot: Financial Giants’ Return to Manhattan Gives Smaller Businesses Hope

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Yves here. One, or in this case, even two robins do not make a spring. But they are indicators. We had warned that the “work at home” trend was not likely to be as durable as many who’d bought homes well away from their former offices would like to think. As we indicated, most CEOs felt that there was a significant productivity loss in having their staffs dispersed. Whatever gains there might be from fewer distractions were offset by many types of collaboration being more difficult, particularly meetings of more than a very few people, as well as the loss of serendipitous casual information-sharing. And what looks like gossip often has an upside, in that learning about personalities and potential or actual scandals helps workers navigate internal bureaucracies.

Admittedly, financial service firms, due to their high volume of transactions, generally benefit from close collaboration, so it makes sense that big banks would be early to bring workers back to the office (assuming Covid stays at current perceived-to-be-tolerable levels).

However, another factor that I believe many former office denizens are underestimating is the face times arms race. Unless an employee is in a role where there really is not much managerial need for regular interaction with the higher ups (like a programmer or a book editor), or a sales role where the rep has strong client relationships and can lay credit to revenue generation, once companies start having employees back a few days in the office, the pressure to put in more face time for competitive reasons will rise. There’s a substantial body of evidence that supports that idea that managers that the higher-ups see more of are more likely to get promotions and plum assignments. Zoom relationships are more shallow than the in-person kind.

JP Morgan CEO Jamie Dimon, in his typical uncensored manner, scotched the notion that his company is a democracy:

“October, it will look just like it did before,” he said. “And everyone is going to be happy with it. You know people don’t like commuting, but so what.”

He added, “I’m about to cancel all my Zoom meetings. I’m done with it.”

And even though I actually didn’t much like working in the Wall Street area, seeing the iconic Fraunces Tavern is nostalgic.

By Greg David. Originally published at THE CITY on May 5, 2021

Two of the city’s most important financial institutions have told their workers to plan to be back in the office soon — raising hopes of the biggest landlords and smallest businesses that New York’s economic recovery will finally pick up speed.

Following Gov. Andrew Cuomo’s surprise announcement Monday that he will lift most restrictions on businesses later this month, Goldman Sachs on Tuesday told employees that it expects them back at its Battery Park headquarters by mid-June. That tosses a potential lifeline to downtown businesses that have seen their cash flow wither since March 2020.

Few are as relieved as Kelley Mondesiré, an acupuncturist, whose business imploded from 90 patients a week to zero during the shutdown to as few as five.

“Goldman’s decision is great because not only it will help me build up my clientele but all the small businesses,” she said. “We need people to come back into the area with some life and some money.”

At the same time, J.P. Morgan Chase CEO Jamie Dimon, who in an April letter to shareholders speculated that the firm would need less space in the future because of remote work, seemed to change his mind: He told a Wall Street Journal conference Tuesday he expects his workforce to come flooding back to the office in September.

“October, it will look just like it did before,” he said. “And everyone is going to be happy with it. You know people don’t like commuting, but so what.”

He added, “I’m about to cancel all my Zoom meetings. I’m done with it.”

A New Ballgame

The big bank decisions are also a boost to Mayor Bill de Blasio, who recently ordered 80,000 city workers back to their offices — and who seemed to prompt the governor’s move by unexpectedly declaring last week that New York City would be completely open by July 1.

The mayor also based his latest budget plan on a sharp pickup in employment, projecting the city would regain 400,000 jobs in the last nine months of the year, resulting in a total increase of 500,000 positions for 2021.

His optimism is in sharp contrast with that of the Independent Budget Office, which in February estimated gain for the year at 152,000 jobs.

“This is exactly what the mayor has been saying: By bringing our workforce back safely and responsibly, and by vaccinating millions of New Yorkers, the city is sending a signal that the comeback is well underway,” said Mitch Schwartz, a de Blasio spokesperson. “It’s great to see the private sector embrace that vision and we’re confident more and more businesses will do the same.”

The governor’s moves to fully open the economy continued Wednesday when he announced that the Mets and Yankees can go to 100% occupancy in stadium sections filled with vaccinated fans, and that Broadway would return on Sept. 14, also at 100% capacity.

Goldman has long been the preeminent firm among traditional Wall Street businesses of investment banking and underwriting. J.P. Morgan is the largest bank in the United States by far with almost $1 trillion in assets more than its closest rival, and is a key player in most Wall Street businesses.

Their announcements trumpet that the biggest and most prestigious firms don’t think that hybrid work with employees in the office only two days a week won’t work. The decisions seem likely to influence other companies.

The Goldman headquarters housed some 7,000 workers before the pandemic, a few of whom have already begun returning to the office. CEO David Solomon, in an email to Goldman employees Tuesday, explained why he wanted everyone back, using a theme likely to be the focus of the pro-office executives in the weeks to come.

“We know from experience that our culture of collaboration, innovation and apprenticeship thrives when our people come together, and we look forward to having more of our colleagues back in the office so that they can experience that once again on a regular basis,” he said.

‘Wind at Our Back’

The city’s biggest landlords immediately seized on the announcement and its rationale.

“The message that Jamie Dimon and David Solomon are sending strongly to the rest of the world is that the city has to come back to work,” said Bill Rudin, co-chairman of Rudin Management Co, which owns 16 offices buildings in the city. “ And we [landlords] are ready.”

Rudin is trying to lease almost 2 million square feet office space at three buildings it has recently redeveloped at 3 Times Square, 90 Pine Street downtown and Dock 72 in Brooklyn. He said business has picked up in recent months, with three-quarters of available space drawing interest.

“We have the wind at our back,” he said hopefully.

Eddie Travers, owner of the Financial District’s well-known Fraunces Tavern and another restaurant in the area, could certainly use an increase in foot traffic.

Last week marked the first time since last March that he saw people in suits come into the restaurant after work on Thursday, which was once the go-to night for colleagues to meet at a bar.

Fraunces Tavern on Pearl Street in the Financial District. May 5, 2021. Yana Paskova/THE CITY

“We are making money from 7 p.m. on Friday to Sunday at 7 p.m.,” he said.

But increasing bar capacity to 75% next week won’t help him because he doesn’t have customers to fill the space during the week with offices still mostly empty.

He and his wife work seven days a week now, and their staff is half the 100 people he employed before the pandemic shutdown.

But Travers said the return of Goldman could be the start of a revival.

“In the past, we have had a lot of their staff hanging out,” he said. “It will be a big help.”

A Boost in the Bronx

The same is true for Mondesiré, the acupuncturist, who is a preferred provider to Goldman and gets referrals when its workers are in need of traditional Chinese medicine.

Her business also has depended on the financial service employees at Barclays and Deutsche Bank for all 13 years it has been downtown.

Also hoping for a return to the office is Liz Neumark, owner of the catering company Great Performances, which just opened a new headquarters and kitchen in the South Bronx that she built out at a cost of $7 million during the pandemic shutdown.

She qualified for tax benefits under the city’s REAP program for firms moving to the other boroughs from Manhattan and she received a $1 million Empire State Development grant while committing to increasing her workforce to 181 people in the coming years.

Prospects for this year are better because she has booked more than twice as many weddings as usual. And corporate inquiries have begun to pick up as well.

During the pandemic she survived by producing some 2.5 million meals for the city under its various programs to feed New Yorkers.

“We used to do meals for $60 a person and here we are doing for $6 and $7 a person,” Neumark said. “But we kept our core staff employed.

This story was originally published by THE CITY, an independent, nonprofit news organization dedicated to hard-hitting reporting that serves the people of New York.

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  1. PHLDenizen

    Anecdotal, but I work at a FIRE sectored company in the Philadelphia area and they’ve opted for a 3-tiered model for post-pandemic work arrangements: completely remote, completely in office, and a hybrid model of 1 or 2 days/week. Whether that translates into 3 tiers of promotion mobility remains to be seen. But avoiding the wage tax is essentially a 4% pay raise for employees and whether or not the local transit authority service level returns to pre-pandemic conditions is a factor. Most commuting into the city take SEPTA and requiring a car-centric commute will be a major disincentive, as there are several other employers to absorb the disgruntled.

  2. ChrisFromGeorgia

    Back in the 90’s, I read a book called “Dinosaurs in the Workplace.” It categorized the workplace as having three main personas:

    1. Competitors
    2. Believers
    3. Rebels.

    The competitors are the type who are always looking to win, by any means necessary. Think politics, not merit. Needless to say, Jamie Dimon falls into this group.

    Believers are those who believe in the “process” or the system. They play by the rules, don’t cheat, and are generally hardworking and honest. But they’re often frustrated because the lazier but more Machiavellian competitors usually beat them out for promotions or plum assignments.

    Then there are the rebels. These are the type who hate the corporate BS, don’t play the “climb the ladder” game and just want to get to do what rewards them intellectually or professionally. They don’t like either of the other two groups, but especially not the competitors. Software developers tend to fall in here.

    The competitors will be the largest group arguing to go back to offices. They need the human drama to feed off. The rebels will fight it tooth and nail, and the believers will do whatever HR policy says they should.

    In tech, rebels make up the majority including management. In banking I am no so sure but I believe it is heavily competitors and believers. Not a perfect framework but it may have some usefulness in predicting how this all plays out.

    1. Arizona Slim

      Back in my office days, I was a rebel. So was my father.

      Both of us quit while we still had quite a few years remaining before retirement. And, surprise-surprise, neither of us regretted this decision.

    2. eg

      I was going to say, Yves point about the “face time” race to the bottom is revealing — the pressure to return is less likely about productivity than it is the ancient requirement both of kings and courtiers to see and be seen at court.

  3. Synoia

    JP Morgan CEO Jamie Dimon, in his typical uncensored manner, scotched the notion that his company is a democracy:

    He added, “I’m about to cancel all my Zoom meetings. I’m done with it.”

    Yes, remote ass kissing does not have the same feel.

    1. Jesper

      Yep, few if any companies are democracies. However, companies do not operate in a vaccuum. They operate in a legal environment and this legal environment is in theory outside of their control.

      In theory then a legislative could legislate to give citizens, workers and consumers (or shorter might be to say just: people) rights at the expense of companies. In practice then I have the impression that the legislative is giving rights to companies at the expense of people.

      I believe that sometimes companies engage in trying to get (or stop) legislation in private and sometimes they do it in the public eye. Companies (or rather CEOs) might be concerned now that unless they change things back to how they liked it then soon they might run the risk of having legislators legislating to keep things as they are – I believe that legislating to keep status quo is less controversial than legislating to change.

      Sometimes the argument used in public is the real reason and other times the argument used in public is cover for something else. Productivity might be the argument used in public but I am not sure if it is the real reason. The productivity argument falls flat if the costs of the commute were to be included, companies see that cost as being zero as the costs are being paid by the people. An honest calculation of productivity would in my opinion include the time and energy cost of the commute.

  4. Half Bankrupt

    I work for a bank in Chicago and the CEO sent a communique yesterday (May 6) that we will return to office fully by September.

    The suspicion is always there that we wait to see what JPMorgan does, then copy it.

  5. redleg

    Working remote, or rather eliminating commutes, is a necessary step to reducing carbon emissions. It looks like another opportunity for progress will be missed.
    I’m so glad that I don’t have an office to go back to, especially just so the person in the corner office can feel like a feudal Lord again. My sincere condolences to those that have to.

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