Hermès Comes to Brooklyn
What the luxury brand’s decision should tell you about the future of the city
Hermes, the French Luxury brand, has announced that they plan to open a flagship store in Williamsburg Brooklyn while shuttering their longtime Madison Avenue location.
Even for New Yorkers who prefer gym sneakers and hunting boots over loafers and high heels the new Hermes location is a big deal. It represents a seismic shift in the city's cultural center of gravity in the post COVID landscape. The luxury company is also bird dogging a lot of changes to come.
One of the great plot twists of the early 21st century has been the shifting fate of the mega city. COVID was a flip the script moment, we’re beginning to see what's next.
In the United States in 1890 around 35% of the population lived in a city. In 2020 that number was around 50%. Economically, socially, and culturally the momentum over the last two decades has been towards centralization and urbanization. Techno futurists be damned, young people continued flocking to expensive cities in an effort to “make it”.
Covid, however, challenged this model. New York City lost around three hundred thousand people. Observers and pundits smugly pontificated that remote work and high speed internet would kill cities off. Silicon Valley thought leaders, lounging poolside amongst Napa vineyards, wondered why anyone bothers with urban living. In a recent episode of the Conversation with Tyler Cowen Podcast, leading Venture capitalist Marc Andreessen made the point that Roman emperors had no office and worked from home. Clearly he saw a parallel between his life and theirs.
Elites nationally seemed to agree. We have recently learned that in the 2020 escape from New York the wealthy took $21 Billion. Even the New York Times had to admit this was a “once in a century shock”. Manhattan continues on but is somehow not its former self. While still relatively safe, residents of the borough increasingly look over their shoulder for violent criminals while looking forward to new locals with better weather and taxes. Florida Real Estate is booming.
The office is leading the decline. As of writing Manhattan office occupancy is at around 40%, a shockingly low number. Anecdotally, midtown feels much quieter, traffic is considerably lighter and the ubiquitous lines of vested office workers waiting for their trendy lunch have disappeared. To be honest it's more pleasant for a stroll, but I can’t imagine having a service business here. Every time I open my Apple News App, I see another story why American employees are rebelling about returning to in person work.
If New York is doing badly, then why is Brooklyn bucking the trend? Home prices have risen faster than anywhere else in the city. Over the last decade 230,000 people have moved to the once marginal borough. Shinny new towers and fancy shops, like Hermes, are moving in. The streets are full of fancy cars and new gyms. Restaurants charge almost twenty bucks for a cocktail.
Maybe we need to rethink our question. If people no longer need to go into an office, and if they have the option to live like Thoreau alongside their own personal Walden Pond, why are they staying in the city at all and why are they increasingly choosing areas like Brooklyn?
2022 and Why Cities are still Awesome
It’s time someone in 2022 made the case for the city.
In 2019 this wasn’t necessary, academics like Richard Florida predicted that urbanization was inevitable. Globally humanity left the countryside for centralized communities. This was particularly true for mega cities, in a winner takes all world the biggest population centers controlled the cultural narrative.
While COVID did indeed shake things up, the scale argument still makes a lot of sense. Some things are just easier and more fun with a lot of people in one place.
The first one that comes to mind is dating and romance. It’s hard, if not impossible, to develop a fulfilling love life online. To put it more bluntly, Cities are vast sexual marketplaces offering a large array of options. As young people become more educated and delay family and children, early adulthood in an urban environment is the set on which modern love occurs. Why do you think all Romcoms are based in big cities?
The dating scene is facilitated by a much maligned industry, night life. COVID has been particularly hard, with 110,000 eating and drinking establishments going out of business nationwide.
If you want the best entertainment and nightlife you have to go to a city. Yes, you can listen to the latest album on Spotify, but its not the same as dancing until the early morning at a live show. You can order a meal kit, but it's not the same as eating at a buzzing new restaurant. Netflix specials are all right, but it's not as good as the local comedy club. Small towns have some of these features, but you need a big city to find the best.
Night life is also surprisingly important for the economy. In New York City there are almost 300,000 people employed in night life (to give you an idea of the scale, there are only 185,000 New Yorkers working in the media). These are sticky jobs, you can’t mix a Martini or sear a steak on Slack. People want to be close to the venues because it's a pain in the ass to go back to the suburbs, especially with a hot date, after a long night out.
This leads me to what could be the biggest factor in why cities are amazing, convenience.
New Yorkers will talk over dinner all night about the one time a year they go to the MET, but most likely they order Seamless and take a Lyft every day. In small town America you can’t walk out your front door at three in the morning and buy a coke and a Falafel.
In short, for how much we complain about cities, they give us an incredible quality of life. I for one enjoy nothing more than a long city stroll punctuated by the occasional stop for an iced coffee or a cocktail. Resources are abundant and something new is always opening.
Why Some Areas are Winning and Others Are Losing
People clearly still want to be in cities, but why are some areas doing better than others?
It seems most knowledge workers are falling into a hybrid work schedules with their week split between home and the office. They still need urban proximity but also require a bit more space.
My new home town of Miami has done a great job of providing a home for modern knowledge workers. It has big city jobs and connectivity with a more relaxed, social, and natural way of life. It’s easy to dismiss the growth of Miami as a COVID flash in the pan, but the pandemic is more or less over and migration to Miami is up by 12% in 2022 from 2021.
Williamsburg has many of the features attracting people to Miami. There is space for new construction. Because of this, homes are higher quality and more affordable. Paradoxically, Miami and Williamsburg were both so shitty for so long there is plenty of space for new business and development. Williamsburg has become a chill modern mini village, one stop away from Manhattan. It’s a luxury enclave and destination.
No one is ready to move to the suburbs. They may flirt with a rural existence but that has its own challenges that are not so easy to surmount. Lack of dining options and limited cell service will send the city slickers placing. Even if they could work from home for the rest time, Zoomers and Millennials have no desire for their parents' ranch home.
In short, they want the best of both worlds. Lots of trendy businesses, walkability and spacious modern housing. Cities and neighborhoods that can deliver on this will thrive.
What does it all mean?
There are indeed lessons to learn. I think you can also reverse apply these lessons to see who will win going forward.
The first lesson, NIMBY policies are destructive. Build Baby Build is a much better moto. Cities and neighborhoods that embrace growth and change will succeed going forward.
The second lesson, People will gravitate towards extremes. It’s cool to live in a big city or in nature, but suburbia combines the worst of both worlds. The middle class is disappearing, and they are taking their bland tastes with them.
The third lesson, some things never change. During COVID there was a lot of talk about how the world will change for the better. In many ways it has, in others it hasn't. People work from home, but they still love to buy fancy clothes. Restaurants and clubs are back to being packed. The minute mask mandates lifted, airports filled with people who want to get back to the travel lifestyle.
We are indeed entering a new era for cities. COVID was an existential crisis but they have adapted and changed in a manner no one could have entirely predicted. It seems clear they still offer a great lifestyle that will remain in demand for years to come. That does not mean that traditional modes of life will not be interrupted.
Great article Andrew! Really enjoyed, makes me want to move. And I agree about all the things that attracts one to a big city. We love where we are now, greatly due to our age. But exceptional restaurants are certainly difficult to find. Hope to see you and Vera soon!