Americans filed a record number of unemployment claims last week, and in New York state, restaurants and hotel owners said Thursday they would be laying off thousands of workers.
The 3.3 million jobless claims bulldozed the prior record from 1982, according to data from the U.S. Department of Labor.
For the real estate industry, the jobless claims mean that companies forced to close because of the coronavirus have had to lay off scores of workers. But it’s not yet known how long the business shutdowns will last.
“If it keeps going, the sheer magnitude will be a depression,” said Gregory Heym, executive vice president and chief economist at Terra Holdings, the parent company of Brown Harris Stevens.
WARN notices, which often signal mass layoffs, have soared in New York state. On Thursday alone, there were 93 such notices filed, and all but two of those noted that the layoffs were temporary because of Covid-19. Generally, only a handful are filed per day, if any at all.
And while a few firms across New York did not say how many employees would be affected, the ones that attributed the layoffs specifically to Covid-19–related closures were set to let go more than 9,400 workers.
(Credit: U.S. Department of Labor)
Hotels and restaurants have been battered by government-mandated closures, travel restrictions and a virus that has yet to be contained. Major retailers already have flagged to their landlords they likely will not be able to pay their rent, and some stores in the city have boarded up their shops with plywood to wait out the pandemic. Major hotel chain Marriott International previously said it was furloughing thousands of employees.
Among those businesses reporting layoffs in New York City were Instagram-favorite locations such as Black Tap Craft Burgers and Beer, which has closed one site. Del Posto restaurant — in Vornado Realty Trust and Related Companies’ building at 85 10th Avenue — said 163 employees would be out of work with its closure. Also listed were 96 workers at the trendy Italian eatery Babbo, in Greenwich Village.
Some of the New York hotels on the list included the Baccarat Hotel at 28 West 53rd Street, parting with 161 employees, and The Watson Hotel at 440 West 57th Street, which is letting go of 138 workers and not taking reservations through April, according to a phone message.
At least one gym, Rumble Fitness, said it was laying off workers, as gyms around the country close to prevent the spread of the virus. Rumble Fitness, which had been embroiled in legal drama between its founder and an early investor, said it was temporarily parting with 146 workers.
While the Department of Labor’s release covered just one week’s worth of data, it likely did not fully capture the scope of the economic crisis at hand, said Peter Earle, an economist at the American Institute for Economic Research. Many people, when they lose their jobs, do not file for unemployment benefits immediately, he said.
“This is unprecedented, really…the number is probably much higher,” Earle said. And while it’s possible that less urban areas may recover sooner and start to reopen, he said, there is a concern that a second outbreak could emerge as people start to move again — before the virus is fully eliminated.
“Officials are going to want to be very careful about that even though they’re under pressure to reopen,” Earle said.
Retail bright spots
While there will be consolidation of retail concepts going forward, some categories are flourishing, especially those that have strong online components and sell essential goods and supplies, said Anjee Solanki of Colliers International. “We are hearing that these categories are seeking additional warehouses to fulfill online orders,” she said.
And despite the dismal layoff figures, markets continued to rebound Thursday, as investors woke up to news that the White House and Senate approved a massive stimulus package that will deliver funds directly to many Americans and provide bailouts to industries that have been significantly hampered by the virus, like airlines. The House of Representatives is expected to pass the measure Friday.
The S&P 500 and the Dow Jones Industrial Average closed up well over 6 percent. An index that tracks real estate investment trusts outperformed those indices, ending the day more than 7.6 percent higher.
“I think there’s a bit of momentum now because of the stimulus and the expectation that that’s coming,” Heym said.
Write to Mary Diduch at md@therealdeal.com