Manhattan Office Supply Soars, Biden Weighs Student Loan Forgiveness

Will vaccines save Manhattan? Can President Biden forgive debt through executive action?
(Brian A Jackson)
(Brian A Jackson)
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“The amount of office space available in Manhattan is at the highest level in at least 30 years,” Bloomberg writes.

The Details:

  1. In Q1, the availability rate jumped to 17.2%, according to real estate services firm. Savills. It was caused largely in part by a “surge in sublease space, which reached 22 million square feet (2 million square meters), 62% higher than before the pandemic.”
  2. New York City took a hit from the pandemic, with lockdowns shifting workers to remote work. The rollout of vaccines could inspire hope of a return.
  3. Asking prices dropped for the fifth straight quarter, down 9% from a year ago to $76.27 per square foot. “The tenant-friendly market is expected to last for at least the next 12 to 18 months, Savills said.”

“President Joe Biden has requested that Education Secretary Miguel Cardona prepare a report on the president’s legal authority to cancel up to $50,000 in student debt per borrower,” CNBC writes.

The Rub:

  1. President Biden has expressed support for $10,000 in student forgiveness. Now, he’s facing mounting pressure to go even further to $50,000 through an executive order.
  2. Even though he’s been reluctant to forgive that amount, “White House press secretary Jen Psaki suggested in February that the administration hadn’t ruled out the possibility.”
  3. On his first day in office, President Biden extended a pause on federal student loan payments until September. However, others have said Biden would run into legal challenges if he tried to circumvent Congress.

Justin Oh:

I believe that New York City has unique characteristics as the U.S.’s main financial and international city and will eventually recover. 

But the city is implementing tax increases at the same time it is seeing deteriorating infrastructure and poverty, which may cause the marginal corporation or wealthy citizens to not come back. 

I believe that NYC real estate will probably recover, but may re-rate to lower levels than where it was pre-pandemic. And the city will need some drastic changes to avoid falling back into the New York City of the 1970s and 1980s.

I, for one, will probably never go back as a full-time resident. It’s hard to justify the prices and exorbitant taxes, especially as there are great work-remote jobs available and even great in-person career opportunities in cities like Dallas, Austin, Miami, Nashville, Charlotte, etc. All while paying 10%+ less in taxes and being able to afford a cleaner, more-spacious lifestyle.

But it’s hard to argue that there is something special about NYC, and cutting my teeth there is an experience I’ll always cherish. And I will always make a concerted effort to return frequently.

Regarding student loan forgiveness, I personally think the whole student loan incentive structure is completely broken. 

Government policies have enabled easy student loan financing to 17 year olds, who are told that college is universally the best path. But in reality, you have “children” taking out massive amounts of debt only to major in non-technical subjects. 

Some statistics:

  • College graduation in the U.S. has doubled over the past 40 years.
  • Tuitions have 2-3x over that time frame, reflecting increased demand and financing.
  • For-profit colleges have grown substantially because of these dynamics as well.

Sure, any major at a top-40 school probably has a high ROI, but non-technical majors at normal state schools often lead to completely unrelated careers. It’s hard to see why one would need $50k to $100k in student loan debt for a service job. 

I generally just emphasize that if one is going to take on loans to go to school, just make sure that it will have a positive ROI.

Student loan forgiveness is just a continuation of taxpayer-subsidized perverse incentives. It might be ok if it’s used to reset the system and change the ongoing dynamics, but if it’s merely a single-time payment and the system doesn’t change, it’s simply unfair for people who already paid back their loans or for the future generation that hasn’t yet taken out their loans.

Now, if as a society, we believe that college education should be a public right, like primary and secondary school, then that’s a better argument for the government paying for everyone’s tuition. But on the other hand, 2-year colleges have always been almost free…

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