Is Brooklyn Leading New York City Out of the Pandemic?

Manhattan has long anchored New York City’s economy, attracting workers and travelers from around the world to its vibrant commercial districts and renowned cultural institutions.

But during the worst of the coronavirus pandemic, Manhattan’s strengths became its undoing. Tourists and commuters disappeared from its bustling sidewalks. Two-thirds of New York City’s job losses were concentrated in the borough.

As Manhattan struggled, the other boroughs helped to pull the city out of its deep economic hole. And by some measures, Brooklyn has led the way.

By the end of 2020, Brooklyn’s share of the city’s private-sector jobs had increased the most of any borough during the pandemic, according to federal labor data. Of the New York City ZIP codes that had the biggest increase in new residents in the first year of the pandemic, eight of the top 10 were in Brooklyn. And last year, home prices in Brooklyn climbed to a record high.

“Like the rest of the city, Brooklyn is still hurting in many ways,” said Jonathan Bowles, executive director of the Center for an Urban Future, a research organization. “But looking forward, Brooklyn is arguably even better positioned for future growth than prior to the pandemic.”

Though Manhattan will always have an outsize importance in driving the city’s economy, the pandemic triggered seismic shifts in how New Yorkers worked, commuted and spent their money, testing the balance of power between Manhattan and the other boroughs.

After the initial months of the pandemic, small business activity in the boroughs outside Manhattan began to rebound much faster than in Manhattan, buoyed by neighborhoods where residents were less likely to have the wealth or the mobility to leave New York.

In the first year of the pandemic, higher-income neighborhoods in Manhattan, including the Upper West Side and Upper East Side, saw the biggest net loss in residents in the city, according to an analysis of postal data by the Partnership for New York City, a business advocacy group.

Brooklyn, meanwhile, was poised to benefit from the shutdown of Manhattan’s office districts. The borough, which has the largest share of college-educated residents outside of Manhattan, became a popular destination for Manhattan residents seeking bigger apartments. Commuters to Manhattan were now working and shopping closer to home, boosting local businesses.

Whether these shifts prove to be lasting — and whether larger employers will start to relocate to Brooklyn — is a key question. Manhattan is home to less than 20 percent of New York City’s residents but accounts for at least half of the city’s tax revenues, according to estimates provided by the New York State comptroller’s office. Even as Manhattan’s share of the city’s property and sales taxes dipped during the pandemic, economists say that business activity in the other boroughs is unlikely to overtake Manhattan any time soon.

But already, the new era of hybrid work has prompted some smaller employers to open offices in Brooklyn, which could have broad ripple effects for neighborhoods across the city’s most populous borough. Brooklyn added more than 230,000 new residents in the past decade, according to 2020 census data released last month, the fastest population growth of any borough.

During the pandemic, Josh Miller made more than a dozen new hires for his start-up, the Browser Company, which is seeking to create a new web browser. He noticed that most of his New York City employees lived in Brooklyn.

After polling his staff members, Mr. Miller decided to relocate his office from NoLIta in Lower Manhattan — which had been an easy area for him to meet with investors and other tech founders — to Brooklyn’s East Williamsburg neighborhood. The company, which has 23 employees, moved in July, and working from the office will not be mandatory.

“Brooklyn went from being an option you wouldn’t consider because of how inconvenient it was to the most convenient,” Mr. Miller said.

Economists say that the pandemic could accelerate a trend that started after the 2008 recession, when job growth in New York City began to be driven by the boroughs outside Manhattan. In the past decade, according to the New York State comptroller’s office, Brooklyn has been the biggest generator of new jobs in the city.

Sanzo, a company that makes sparkling water in Asian-inspired flavors, opened its first physical office this summer in a co-working space in Brooklyn’s Dumbo neighborhood, a popular destination for start-ups.

Alessandro Roco, who founded the company in 2019, said he was concerned about pandemic burnout for his eight employees and wanted to find an office in a neighborhood where they can “breathe a little,” without the stress of Manhattan’s hustle and bustle. Mr. Roco himself moved from Queens to Brooklyn during the pandemic, so his commute is now just a 12-minute bike ride.

“I was originally thinking we were going to open an office in Manhattan,” said Mr. Roco. “But when I even floated the idea of a potential place in Dumbo, you could see everyone’s eyes light up.”

Among small businesses that were operating before the pandemic, only 47 percent were open in Manhattan in July, compared with 67 percent in Brooklyn, according to data from Homebase, which provides scheduling and time-tracking software for businesses.

The contrast has been especially stark in service-sector businesses, such as restaurants and salons, which were the hardest hit by job losses. Employment at those businesses in Manhattan is still 15 percent lower than it was in February 2020, while it is up 10 percent in Brooklyn in the same period, according to data from Gusto, a payroll provider for small companies.

Although the shift to remote work has hurt Manhattan restaurants that relied on the post-work happy hour crowds, it has helped restaurants in residential neighborhoods like Negril BK, which serves Caribbean cuisine in Brooklyn’s Park Slope.

Before the pandemic, the restaurant, which had live music and a vibrant party atmosphere, was a destination for customers who tended to travel from farther away in Brooklyn and around the region to try its jerk chicken and rum cocktails.

The restaurant did not have a strong base of customers in the family-friendly neighborhood until the pandemic, when outdoor dining became an inviting way for locals to try the food, said Malissa Browne, a co-owner.

As Park Slope residents worked from home, Ms. Browne noticed a big increase in diners on Tuesdays and Wednesdays. At one point, the restaurant opened at 2 p.m., earlier than usual, to accommodate demand.

“When the neighborhood did give us a try, they loved it,” Ms. Browne said. “They turned into repeat clients.”

Still, the growth of the city’s economy beyond Manhattan is impeded in part by infrastructure.

There is limited office space outside Manhattan, hindering larger companies from filling workplaces across the boroughs. And the city’s commuter rail system revolves around shuttling people in and out of the heart of Manhattan, making it less convenient for an employee living in New Jersey, for instance, to commute to Brooklyn.

But for employees like Pavel Samsonov, commuting into Midtown Manhattan may no longer be a priority.

For three years, Mr. Samsonov lived in a 350-square-foot studio apartment on the Upper East Side, a quick subway ride to his job near Grand Central Terminal.

In March 2020, as New York City was shutting down from the pandemic, he started a new job as a design architect at Amazon Web Services, the cloud-computing arm of Amazon. Afraid of catching the coronavirus, he did not venture outside his studio for 10 weeks.

“It was really depressing,” said Mr. Samsonov. “I ended up breaking my lease. I couldn’t take it anymore.”

In search of more space, he moved with his fiancée in October to a two-bedroom apartment in Brooklyn’s Crown Heights neighborhood. He said he would consider relocating further into Brooklyn; he and his fiancée both now have fully remote jobs.

Though Brooklyn’s population is growing, many of its longtime, lower-income residents are struggling. The job losses in Manhattan have been concentrated among lower-wage workers — the hotel cleaners, restaurant cooks, tour guides — who are unable to work from home and tend to live outside Manhattan, exacerbating the city’s uneven recovery. Brooklyn’s residents have an unemployment rate of 10.5 percent, higher than the 7.8 percent in Manhattan.

The challenge moving forward, economists say, is figuring out how to fuel job growth in Brooklyn in a way that provides opportunities for local residents without pricing them out.

So far, the pandemic appears to have accelerated the affordability crisis in Brooklyn. The median home sales price in the borough keeps climbing, reaching $910,000 last quarter, according to the appraisal firm Miller Samuel.

Business leaders said that after many minority-owned small businesses in Brooklyn closed permanently during the pandemic, their storefronts were taken over by white entrepreneurs who could raise money from family and friends.

“If we truly want an equitable recovery, entrepreneurs of color need a new financing framework that acknowledges the historic disadvantages they’re facing in accessing capital,” said Randy Peers, president of the Brooklyn Chamber of Commerce.

During the pandemic, Suzanna Cameron, who has owned a florist studio in Brooklyn’s Bushwick neighborhood since 2018, noticed lots of new faces shopping in her store, including customers who said they had just moved in from the glitzy Meatpacking District in Manhattan. Thanks to more affluent customers, her retail flower sales jumped 50 percent last year compared with 2019, helping to make up for the steep drop in weddings.

Ms. Cameron has grappled with the impact of her business in the changing neighborhood.

“I know that gentrification can be good for the economy, but also I know it pushes people out,” she said. The studio regularly donates flowers and money to local nonprofit organizations, which she said was an acknowledgment of her role as a “white-owned business coming into an area that’s traditionally been lower-income.”

“It’s my way of hopefully balancing that out in some kind of way,” she said.