stayed home to avoid Covid-19 in 2020, one of the most iconic buildings in the nation’s capital, Union Station, sat virtually empty. The Beaux Arts–style rail
The plight of Union Station is one of the most visible manifestations of the crisis facing America’s urban cores, which for decades relied on a steady stream of office workers to remain economically vibrant. More than three years after the lockdowns, it’s obvious that those workers are never returning in the same numbers.
“You’ve got to get rid of the debt,” says Jeff Greene, a 68-year-old real estate billionaire based in Florida who made his fortune from misfortune. During the 2008 financial crisis, Greene bought credit default swaps on subprime mortgage–backed bonds as the housing market crashed, resulting in a windfall of $800 million. “There are these young guys, kind of in that whole Ben Ashkenazy group, spending the big bucks, flying around.
That value destruction will hit city budgets. A 2021 research paper from the nonprofit Institute on Taxation and Economic Policy found that cities like Chicago, New York and San Francisco—which depend on property taxes for more than 20% of their revenue—could see those proceeds decline by more than 5%, potentially costing hundreds of millions of dollars in future tax receipts.
“Now they’re saying ‘Stay alive till ’25,’ ” Greene says. “It’s going to take a long time to clean this mess up.this crisis, America’s savviest real estate operators are going back to basics. The dreamers had their moment—erecting lavish buildings financed with near-zero-interest loans. But the present belongs to the pragmatists, those who kept their cool and followed age-old wisdom like using little leverage, buying good locations and developing strong banking relationships.
“Do we need help from our lenders? Yes, everyone needs flexibility right now,” he says. “We’re keeping lenders apprised of what’s going on, being transparent, explaining why things are the way they are.”It has been difficult for Cohen to replace tenants like Ralph Lauren and law firm Locke Lord, both of which ended their leases before the pandemic—“leasing activity is spotty,” he says—but he is seeing some success by being more flexible with clients who are now more price-conscious.