Despite efforts to contain the coronavirus outbreak, it seems the dreaded second wave is here. With cases spiking throughout the country, some states are taking steps to curb the spread of the virus. But the measures New York state is now seeking to impose could have a tremendous impact on the city's tourism industry, and that pain could extend all the way to real estate investors.
A new mandate
On Oct. 31, New York Governor Andrew Cuomo announced a new testing-based policy for travelers to the state. Specifically, those who wish to travel to New York will need to get tested for COVID-19 within three days of their departure from their home state. Then, after arriving in New York, they'll be asked to quarantine for three days and take a COVID-19 test on their fourth day in town. If that test is negative, they'll be free to roam, but if positive, they'll be required to quarantine for 14 days. Visitors to New York who don't wish to undergo testing for COVID-19 can opt to isolate for 14 days upon arrival.
This policy does not apply to New York's neighboring states: New Jersey, Connecticut, Pennsylvania, and Massachusetts. Though cases have been surging in these states as well, Cuomo believes enforcing a quarantine mandate just wouldn't be feasible. But because his new mandate applies to the bulk of the country, it could seriously affect tourism -- especially to New York City, which tends to peak during the holiday season.
The impact on real estate investors
New York's new quarantine mandate makes travel to the state a logistical nightmare. It also effectively makes short stays impossible, given that visitors will effectively have to isolate and wait out COVID-19 test results for close to a week before actually getting to go anywhere and do anything.
As such, a number of things are likely to happen in New York in the near term and during the holiday season:
- Hotels will have even fewer guests.
- Restaurants will have fewer patrons.
- Retailers will have less foot traffic.
All this means less revenue. And that could spell trouble in the real estate world.
Many hotels are already on the verge of financial ruin, and a number of big-name New York City hotels have already closed their doors during the pandemic. If hotels don't see a modest uptick in revenue during the holidays, more could shutter, which, clearly is bad for investors.
New York restaurants, too, have been struggling. A lack of a holiday surge could drive some establishments over the edge and force them to close permanently, leaving commercial landlords with broken leases and vacancies on their hands.
And then there's the retail industry -- one that's been loaded with bankruptcies ever since the pandemic kicked into full gear. A lack of holiday spending could lead to more store closures throughout New York, hurting retail REITs and commercial landlords alike.
Of course, this isn't to say Cuomo's mandate isn't warranted. Letting the coronavirus outbreak get out of control in and around the city that began as the pandemic's epicenter isn't something those in power can be expected to sit back and let happen. But unfortunately, these new rules could seriously hinder New York tourism at a time when Manhattan in particular can't afford another hit.