'This Is Our City': Why Scott Rechler Is Bringing RXR Back To The Office, Making Bankers Ride The Subway
The ever-optimistic real estate industry has publicly expressed confidence in New York City's ability to come back from the coronavirus pandemic’s economic blow, citing its recovery from the 9/11 terrorist attacks and the Great Financial Crisis. But that famous Big Apple resilience hasn’t shown up yet, and even New York commercial real estate luminaries like RXR Realty CEO Scott Rechler are coming to grips with that reality.
“When you look at what happened post-9/11, there was that sense of patriotic 'we’re going to beat this together,' and I feel now, there’s a little bit of like we’re surrendering to the virus,” Rechler said Tuesday on a Bisnow webinar. “When I talk to colleagues who have not returned to the city, they are asking questions as if they are going to a foreign country. This is our city.”
RXR, like many real estate players in New York City, has brought its workers back to the office. Those with medical conditions or child care issues do not have to return, but 90% of employees are back at their desks each day, an RXR spokesperson said.
SL Green representatives boasted at One Vanderbilt’s opening last week of having a 100% “work from office” team since June, Related has also said its employees are back at the office full time, and CEO Jeff Blau has implored the business community to return to the city — as has Mayor Bill de Blasio.
“We are in this weird situation — so many New Yorkers are not in New York. They are not living and experiencing it," Rechler said, adding that he can look all RXR “employees in the face” and tell them the company has done everything it can to ensure safety.
In a follow-up interview with Bisnow, he said he was out of the city and based on Long Island from March through June, while New York was the global epicenter of the virus and thousands of New Yorkers died.
Six RXR employees, who were essential workers operating on-site at the company's buildings, died from the virus, he said.
“I felt if I was going to ask all my team members to work from home, I had to do that,” he said. “I appreciate the anxiety, and I’m not insensitive to it … We lost six team members in the month of April, essential workers, they didn't get sick in our buildings but they passed from COVID. I know it’s not easy. After 9/11, I lost neighbors and loved ones, but I went back to tall buildings. The point is, you have to find a way.”
Still, so far, RXR’s buildings are mainly empty, like most offices across the city. RXR's portfolio has occupancy between 10% and 30% as of last week, an increase from the 5% to 15% level before Labor Day.
Other officers owners, including Rudin, Durst Organization and Fisher Brothers, were all reporting occupancy lower than 20% last Thursday. While some banks, notably JPMorgan Chase, Barclays and Goldman Sachs (all of which have experienced outbreaks), have told workers to start coming back, many other office occupiers — Deutsche Bank and Facebook among them — are staying remote or letting staff make their own choice.
That doesn’t sit well with Rechler, who says the city will not survive unless people come back.
“It needs to be a civic responsibility to bring people back to the city, to support the small businesses, support the cultural institutions and get that ecosystem moving again,” he said. “If we don’t come back and start re-creating the same quality of life, we are not going to be able to sustain the same level of growth. We'll have urban flight.”
Rechler, a former vice chairman of the Port Authority of New York and New Jersey and Metropolitan Transportation Authority board member, said he is leading by example, taking the subway and encouraging his team to do the same.
After someone from an investment bank requested to do a taped interview with him to show investors, he suggested they ride the subway together. The bank's representative told him he had not been on the subway for six months. Rechler said they will be riding from lower Manhattan to uptown on the train together on Monday.
"The facts would argue the subway system is safe and public transport in general is safe … but the psychology is the opposite," Rechler said. "People are afraid of it. How do you overcome it? You get people to ride it. That’s why I ride it. My team rides it, the elected officials should ride it and business leaders should ride it."
Commuters are certainly not flooding back. Ridership on the subway, Long Island Rail Road and Metro-North remains less than one-third of pre-coronavirus levels as of mid-September, The Real Deal reports, citing MTA transport data. Earlier this month, Gov. Andrew Cuomo announced riders who do not wear masks would face a $50 fine.
RXR has rolled out an app for employees and tenants that allows them to do a daily health check and monitor infection numbers. The company requires masks to be worn at all times when employees are not at their desks, and conference rooms have been reconfigured to a “living room” environment so that people can safely meet.
Plexiglass has been installed around workstations, and the space was entirely recalibrated so that employees could space themselves out safely, RXR officials said.
Everyone carries a small device that will buzz if they go within 6 feet of someone else and provides a score to individuals on how well they are performing in their social distancing.
Further, cameras track mask compliance, Rechler said. The company will soon start what Rechler calls a “proactive” testing program with employees. In the event of an outbreak, Rechler said the app will tell the company exactly who has been in contact with the virus and enable those people to work from home without major disruption.
“We have to get used to coming to the great indoors again. … I’m not saying blindly rush into the fire of the virus — we have to smartly co-exist with it,” Rechler said during the webinar. “Just like we have been able to co-exist with the threat of terrorism we didn’t know about pre-9/11 ... this is here and it's not going away anytime soon. We have to find a way to recalibrate, reimagine how we are going to go and operate our city and community in a way that people can function.”