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Manhattan Emptied Out During the Pandemic. But Big Tech Is Moving In.

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Facebook has just leased enough new office space in Manhattan to nearly triple its current local work force, including at one of the city’s most iconic buildings, the 107-year-old former main post office complex near Pennsylvania Station.

Apple, which set up its first office in New York a decade ago, is expanding to another building in Manhattan. And Google and Amazon are stitching together corporate campuses in the city more quickly than anywhere else in the world. Amazon paid roughly $1 billion in March for the iconic Lord & Taylor building on Fifth Avenue.

Despite a pandemic that has ravaged New York, hollowed out many of its office buildings and raised fundamental questions about its future, the four companies collectively known as Big Tech are all significantly expanding their footprint in the city, giving it a badly needed vote of confidence.

With fears that the virus could spike again in the colder months, many companies are grappling with how, when and even if office workers will come back to buildings in Manhattan. And the tech giants have not brought their workers back yet, either.

Even so, the giants have not only moved forward with previous growth plans, but have also increased their pace of hiring and office acquisition during the pandemic.

The industry’s embrace of New York City comes despite the tumultuous reception that Amazon received last year when it proposed building a sprawling headquarters in Queens. Amazon abandoned the plans in the face of political and community opposition, but now has acquired more than 2 million square feet of office space for corporate workers, as well as warehouses from Staten Island to Queens to the Bronx.

After Amazon bought the Lord & Taylor building, it announced in August that 2,000 employees would eventually work there, increasing by half its current tech work force of 4,000.

Amazon now has eight office properties in New York, most of which are clustered in Midtown. The company recently expanded outside Manhattan, leasing space on the Brooklyn waterfront for its Amazon Music team.

“We know that talent attracts talent, and we believe that the creative energy of cities like New York will continue to attract diverse professionals from around the world,” said Ardine Williams, Amazon’s vice president of work force development.

Big Tech Snaps Up More Space

Even with the uncertainty of the pandemic, the country’s four biggest technology companies have leased or bought enough office space in New York to hold more than 22,000 employees.

Squares on the map show where Facebook, Google, Amazon and Apple have leased or bought space.

Even with Big Tech’s expansion, the city continues to face a fundamental challenge: Most offices have been deserted since March, devastating the local economy and the ecosystem of transit, stores, restaurants and other business that depend on workers. Only about 12 percent of workers have returned to Manhattan offices managed by CBRE, a commercial real estate firm that manages 20 million square feet of office space in the city.

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Many people do not want to go back to offices until there is a vaccine. Even after that, there are mounting questions about whether the pandemic has fundamentally tarnished the allure of the office towers of Midtown and Lower Manhattan.

What’s more, a recent uptick in new cases in parts of Brooklyn and Queens has raised fears that a second wave looms and that restrictions on daily life could be reimposed.

Collectively, Amazon, Google, Facebook and Apple have hired more than 2,600 employees in the city so far this year, bringing their total employment to over 22,000 people. Facebook alone has added 1,100 workers to bring its current work force up to 4,000.

Apple, Amazon and Facebook have gobbled up more than 1.6 million square feet of office space since the start of the year, most of which was leased or bought during the pandemic. Before the pandemic, Google added about 1.7 million square feet of office space as part of a corporate campus rising along the Hudson River in Manhattan.

The companies now have enough new office space to hire another 15,000 employees. When those workers will arrive at the new offices remains uncertain; all four companies have allowed their employees to work remotely and some, including Facebook, foresee a future in which up to half its employees work from home.

Executives at the companies said their investments even during one of the city’s darkest periods reflect their belief that the features that set New York apart — its diversity, culture, regional transportation network and numerous colleges and universities — will keep luring people after the pandemic.

Image“The city has grit and resilience and diversity, and it was always going to be inspirational for businesses like ours,” said Kia D. Floyd, a Facebook executive.
Credit…Gabby Jones for The New York Times

To a large extent, the companies are also wagering that current and future employees will be eager to return to shared workplaces that promote spontaneity and collaboration.

“The big takeaway here is that New York will always be a tech hub,” said William Floyd, director of external affairs for Google’s New York offices, which has about 9,000 workers, more than half of whom are engineers.

Google is on target to employ 14,000 people in the city in the coming years, fulfilling a 2018 pledge to double its New York City work force. The company has pieced together a sizable corporate campus in and around the Chelsea neighborhood in Manhattan, including several properties that are under construction.

The tech sector first settled in New York more than two decades ago, a tiny player in the shadows of the city’s traditional powerhouse industries like finance, media, real estate and health care. Google opened its first outpost outside California, a sales office in Manhattan with a lone employee, in 2000.

But in recent years, New York has blossomed into a bona fide tech hub, an East Coast rival to Silicon Valley that has become a second home to tech behemoths but has also given rise to thousands of start-ups.

The larger companies have established a tech corridor on Manhattan’s West Side, stretching from West 34th Street in Midtown south to the World Trade Center area in Lower Manhattan.

The focus of the tech companies in New York has shifted from marketing and sales departments to teams that mirror those in Silicon Valley. They have recruited engineers and developers from local and regional universities and filled some roles with West Coast employees who want to decamp to New York City.

For every Big Tech company in the city, there are numerous smaller but still sizable firms, including Salesforce, LinkedIn, Spotify and ZocDoc. Microsoft, another tech giant, has a modest presence in offices near Times Square.

Before the pandemic, the city’s tech sector employed 150,100 people, and had added a total of 15,700 jobs in 2018 and 2019, according to the New York State comptroller’s office. Most of the new jobs were in fields like software, data processing and internet publishing.

The pace of hiring is expected to keep climbing.

In August, when Facebook grabbed all the office space at the James A. Farley Building near Pennsylvania Station, it cemented Manhattan’s West Side as its East Coast campus.

The company said it leased 730,000 square feet at the old post office in part because of its cavernous layout — a rarity among New York City buildings — which mimics the large open areas at its headquarters in Menlo Park, Calif. When a renovation is completed next year, the building will be filled with engineers.

“The floor plan will allow for multiple teams to be housed on those floors,” said Jamila Reeves, a company spokeswoman, “and we don’t necessarily have to break folks up.”

Around the corner from the Farley Building, Apple signed a lease for 220,000 square feet at 11 Penn Plaza, a 1923 Art Deco tower near Madison Square Garden.

Before the deal, Apple, which has said very little about its plans in the city, had not expanded beyond an office building on Fifth Avenue in the Flatiron neighborhood that it moved into in 2011.

Smaller tech companies have also kept adding to their payrolls right through the outbreak.

MongoDB, a cloud database platform whose headquarters are in Midtown Manhattan, has hired 97 employees since the beginning of the pandemic, bringing its total work force in the city to 551.

The company, whose products are used by Verizon, eBay and Adobe among other companies, has more than 2,100 employees worldwide and is creating a hybrid work model to have employees work remotely some days and in the office on others.

“While there are questions about what the future of work post-Covid will look like, we plan to maintain office spaces in New York,” said Dev Ittycheria, the company’s chief executive. “We believe that being physically present with colleagues in an office can offer important opportunities for in-person interaction, collaboration, and connection that are important for the success of our company.”

One of the company’s newest hires, Farah Wahab, started in August as a product marketing manager after working for five years at tech companies in San Francisco.

Though San Francisco has a far larger tech scene, she said the city felt more insular compared with New York.

“I love S.F. but it can feel a bit like a tech-centric bubble isolated from the real world,’’ Ms. Wahab, 32, said. “Being around different industries and types of people, as well as greater access to the market, was important to me both personally and professionally.”

Kia D. Floyd, Facebook’s head of public policy for the east and Midwest regions, pointed out that the company set up shop in New York shortly before the 2008 great recession, another challenging period of uncertainty in the city.

“People fled the city then and didn’t think it would come back,” Ms. Floyd said. “But the city has grit and resilience and diversity, and it was always going to be inspirational for businesses like ours.”

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The Trump campaign celebrated a growth record that Democrats downplayed.

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The White House celebrated economic growth numbers for the third quarter released on Thursday, even as Joseph R. Biden Jr.’s presidential campaign sought to throw cold water on the report — the last major data release leading up to the Nov. 3 election — and warned that the economic recovery was losing steam.

The economy grew at a record pace last quarter, but the upswing was a partial bounce-back after an enormous decline and left the economy smaller than it was before the pandemic. The White House took no notice of those glum caveats.

“This record economic growth is absolute validation of President Trump’s policies, which create jobs and opportunities for Americans in every corner of the country,” Mr. Trump’s re-election campaign said in a statement, highlighting a rebound of 33.1 percent at an annualized rate. Mr. Trump heralded the data on Twitter, posting that he was “so glad” that the number had come out before Election Day.

The annualized rate that the White House emphasized extrapolates growth numbers as if the current pace held up for a year, and risks overstating big swings. Because the economy’s growth has been so volatile amid the pandemic, economists have urged focusing on quarterly numbers.

Those showed a 7.4 percent gain in the third quarter. That rebound, by far the biggest since reliable statistics began after World War II, still leaves the economy short of its pre-pandemic levels. The pace of recovery has also slowed, and now coronavirus cases are rising again across much of the United States, raising the prospect of further pullback.

“The recovery is stalling out, thanks to Trump’s refusal to have a serious plan to deal with Covid or to pass a new economic relief plan for workers, small businesses and communities,” Mr. Biden’s campaign said in a release ahead of Thursday’s report. The rebound was widely expected, and the campaign characterized it as “a partial return from a catastrophic hit.”

Economists have warned that the recovery could face serious roadblocks ahead. Temporary measures meant to shore up households and businesses — including unemployment insurance supplements and forgivable loans — have run dry. Swaths of the service sector remain shut down as the virus continues to spread, and job losses that were temporary are increasingly turning permanent.

“With coronavirus infections hitting a record high in recent days and any additional fiscal stimulus unlikely to arrive until, at the earliest, the start of next year, further progress will be much slower,” Paul Ashworth, chief United States economist at Capital Economics, wrote in a note following the report.

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Black and Hispanic workers, especially women, lag in the U.S. economic recovery.

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The surge in economic output in the third quarter set a record, but the recovery isn’t reaching everyone.

Economists have long warned that aggregate statistics like gross domestic product can obscure important differences beneath the surface. In the aftermath of the last recession, for example, G.D.P. returned to its previous level in early 2011, even as poverty rates remained high and the unemployment rate for Black Americans was above 15 percent.

Aggregate statistics could be even more misleading during the current crisis. The job losses in the initial months of the pandemic disproportionately struck low-wage service workers, many of them Black and Hispanic women. Service-sector jobs have been slow to return, while school closings are keeping many parents, especially mothers, from returning to work. Nearly half a million Hispanic women have left the labor force over the last three months.

“If we’re thinking that the economy is recovering completely and uniformly, that is simply not the case,” said Michelle Holder, an economist at John Jay College in New York. “This rebound is unevenly distributed along racial and gender lines.”

The G.D.P. report released Thursday doesn’t break down the data by race, sex or income. But other sources make the disparities clear. A pair of studies by researchers at the Urban Institute released this week found that Black and Hispanic adults were more likely to have lost jobs or income since March, and were twice as likely as white adults to experience food insecurity in September.

The financial impact of the pandemic hit many of the families that were least able to afford it, even as white-collar workers were largely spared, said Michael Karpman, an Urban Institute researcher and one of the studies’ authors.

“A lot of people who were already in a precarious position before the pandemic are now in worse shape, whereas people who were better off have generally been faring better financially,” he said.

Federal relief programs, such as expanded unemployment benefits, helped offset the damage for many families in the first months of the pandemic. But those programs have mostly ended, and talks to revive them have stalled in Washington. With virus cases surging in much of the country, Mr. Karpman warned, the economic toll could increase.

“There could be a lot more hardship coming up this winter if there’s not more relief from Congress, with the impact falling disproportionately on Black and Hispanic workers and their families,” he said.

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Ant Challenged Beijing and Prospered. Now It Toes the Line.

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As Jack Ma of Alibaba helped turn China into the world’s biggest e-commerce market over the past two decades, he was also vowing to pull off a more audacious transformation.

“If the banks don’t change, we’ll change the banks,” he said in 2008, decrying how hard it was for small businesses in China to borrow from government-run lenders.

“The financial industry needs disrupters,” he told People’s Daily, the official Communist Party newspaper, a few years later. His goal, he said, was to make banks and other state-owned enterprises “feel unwell.”

The scope of Mr. Ma’s success is becoming clearer. The vehicle for his financial-technology ambitions, an Alibaba spinoff called Ant Group, is preparing for the largest initial public offering on record. Ant is set to raise $34 billion by selling its shares to the public in Hong Kong and Shanghai, according to stock exchange documents released on Monday. After the listing, Ant would be worth around $310 billion, much more than many global banks.

The company is going public not as a scrappy upstart, but as a leviathan deeply dependent on the good will of the government Mr. Ma once relished prodding.

More than 730 million people use Ant’s Alipay app every month to pay for lunch, invest their savings and shop on credit. Yet Alipay’s size and importance have made it an inevitable target for China’s regulators, which have already brought its business to heel in certain areas.

These days, Ant talks mostly about creating partnerships with big banks, not disrupting or supplanting them. Several government-owned funds and institutions are Ant shareholders and stand to profit handsomely from the public offering.

The question now is how much higher Ant can fly without provoking the Chinese authorities into clipping its wings further.

Excitable investors see Ant as a buzzy internet innovator. The risk is that it becomes more like a heavily regulated “financial digital utility,” said Fraser Howie, the co-author of “Red Capitalism: The Fragile Financial Foundation of China’s Extraordinary Rise.”

“Utility stocks, as far as I remember, were not the ones to be seen as the most exciting,” Mr. Howie said.

Ant declined to comment, citing the quiet period demanded by regulators before its share sale.

The company has played give-and-take with Beijing for years. As smartphone payments became ubiquitous in China, Ant found itself managing huge piles of money in Alipay users’ virtual wallets. The central bank made it park those funds in special accounts where they would earn minimal interest.

After people piled into an easy-to-use investment fund inside Alipay, the government forced the fund to shed risk and lower returns. Regulators curbed a plan to use Alipay data as the basis for a credit-scoring system akin to Americans’ FICO scores.

China’s Supreme Court this summer capped interest rates for consumer loans, though it was unclear how the ceiling would apply to Ant. The central bank is preparing a new virtual currency that could compete against Alipay and another digital wallet, the messaging app WeChat, as an everyday payment tool.

Ant has learned ways of keeping the authorities on its side. Mr. Ma once boasted at the World Economic Forum in Davos, Switzerland, about never taking money from the Chinese government. Today, funds associated with China’s social security system, its sovereign wealth fund, a state-owned life insurance company and the national postal carrier hold stakes in Ant. The I.P.O. is likely to increase the value of their holdings considerably.

“That’s how the state gets its payoff,” Mr. Howie said. With Ant, he said, “the line between state-owned enterprise and private enterprise is highly, highly blurred.”

China, in less than two generations, went from having a state-planned financial system to being at the global vanguard of internet finance, with trillions of dollars in transactions being made on mobile devices each year. Alipay had a lot to do with it.

Alibaba created the service in the early 2000s to hold payments for online purchases in escrow. Its broader usefulness quickly became clear in a country that mostly missed out on the credit card era. Features were added and users piled in. It became impossible for regulators and banks not to see the app as a threat.

ImageAnt Group’s headquarters in Hangzhou, China.
Credit…Alex Plavevski/EPA, via Shutterstock

A big test came when Ant began making an offer to Alipay users: Park your money in a section of the app called Yu’ebao, which means “leftover treasure,” and we will pay you more than the low rates fixed by the government at banks.

People could invest as much or as little as they wanted, making them feel like they were putting their pocket change to use. Yu’ebao was a hit, becoming one of the world’s largest money market funds.

The banks were terrified. One commentator for a state broadcaster called the fund a “vampire” and a “parasite.”

Still, “all the main regulators remained unanimous in saying that this was a positive thing for the Chinese financial system,” said Martin Chorzempa, a research fellow at the Peterson Institute for International Economics in Washington.

“If you can’t actually reform the banks,” Mr. Chorzempa said, “you can inject more competition.”

But then came worries about shadowy, unregulated corners of finance and the dangers they posed to the wider economy. Today, Chinese regulators are tightening supervision of financial holding companies, Ant included. Beijing has kept close watch on the financial instruments that small lenders create out of their consumer loans and sell to investors. Such securities help Ant fund some of its lending. But they also amplify the blowup if too many of those loans aren’t repaid.

“Those kinds of derivative products are something the government is really concerned about,” said Tian X. Hou, founder of the research firm TH Data Capital. Given Ant’s size, she said, “the government should be concerned.”

The broader worry for China is about growing levels of household debt. Beijing wants to cultivate a consumer economy, but excessive borrowing could eventually weigh on people’s spending power. The names of two of Alipay’s popular credit functions, Huabei and Jiebei, are jaunty invitations to spend and borrow.

Huang Ling, 22, started using Huabei when she was in high school. At the time, she didn’t qualify for a credit card. With Huabei’s help, she bought a drone, a scooter, a laptop and more.

The credit line made her feel rich. It also made her realize that if she actually wanted to be rich, she had to get busy.

“Living beyond my means forced me to work harder,” Ms. Huang said.

First, she opened a clothing shop in her hometown, Nanchang, in southeastern China. Then she started an advertising company in the inland metropolis of Chongqing. When the business needed cash, she borrowed from Jiebei.

Online shopping became a way to soothe daily anxieties, and Ms. Huang sometimes racked up thousands of dollars in Huabei bills, which only made her even more anxious. When the pandemic slammed her business, she started falling behind on her payments. That cast her into a deep depression.

Finally, early this month, with her parents’ help, she paid off her debts and closed her Huabei and Jiebei accounts. She felt “elated,” she said.

China’s recent troubles with freewheeling online loan platforms have put the government under pressure to protect ordinary borrowers.

Ant is helped by the fact that its business lines up with many of the Chinese leadership’s priorities: encouraging entrepreneurship and financial inclusion, and expanding the middle class. This year, the company helped the eastern city of Hangzhou, where it is based, set up an early version of the government’s app-based system for dictating coronavirus quarantines.

Such coziness is bound to raise hackles overseas. In Washington, Chinese tech companies that are seen as close to the government are radioactive.

In January 2017, Eric Jing, then Ant’s chief executive, said the company aimed to be serving two billion users worldwide within a decade. Shortly after, Ant announced that it was acquiring the money transfer company MoneyGram to increase its U.S. footprint. By the following January, the deal was dead, thwarted by data security concerns.

More recently, top officials in the Trump administration have discussed whether to place Ant Group on the so-called entity list, which prohibits foreign companies from purchasing American products. Officials from the State Department have suggested that an interagency committee, which also includes officials from the departments of defense, commerce and energy, review Ant for the potential entity listing, according to three people familiar with the matter.

Ant does not talk much anymore about expanding in the United States.

Ana Swanson contributed reporting.

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