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NEW YORK CITY-The next four years promise serious challenges to the city’s already recession-bruised economy and Mayor Michael Bloomberg, who narrowly won his bid for a third term Tuesday. Not only does the writing on the wall show billions of dollars in commercial mortgages coming home to roost, but there are indications that the financial services industry, long the main economic driver of New York City’s economy and perhaps the largest customer of the city’s commercial real estate market, will continue to downsize.

At 10.3%, the city’s unemployment rate is at a 16-year high. Driving the numbers further home for the commercial real estate community, the New York State Department of Labor estimates that since 2008, New York’s financial sector has shed 32,000 jobs.

Increasing job loss and further signs of fundamental changes to the industry that the city has always seen as its biggest cash cow now create an even greater sense of urgency for the mayor, as he seeks to do what he can to grow the city’s economy and further diversify its job market. Among the few real estate figures that agreed to speak on record about the election, there was general agreement that Bloomberg is the most steady-handed to shepherd the city, its business and the commercial real estate community through to a recovery. Still, in the face of increased economic uncertainty, there were calls for change in city policy, including its tax structure, and perhaps more importantly, job creation.

For now, “Based upon the city’s fiscal position, the mayor will have to maneuver along the fine line between cutting spending and raising taxes to bridge the gaps,” according to Robert Knakal, chairman at Massey Knakal Realty Services.

Knakal tells GlobeSt.com he’s “hopeful that real spending cuts can be implemented, while maintaining the present quality of life in the city, such that our tax structure can be adjusted to a more competitive level. We need to continue to attract individuals and businesses and our tax structure works against that objective.”

But he also says, “What the commercial real estate market needs most is, simply, job growth in the city. Nothing is more critical, and anything the Mayor can do to promote job growth is of paramount importance.”

Back in June, when GlobeSt.com reported from the Urban Land Institute New York’s “Changing Face of New York City’s Economy” conference, deputy mayor Robert Lieber told attendees that “the speed at which New York City recovers is going to be determined by the magnitude, depth and breadth of talent we have here.” Lieber stressed that the talent pool extends well beyond the financial services industry. He also said, “We have to do more to get the other sectors to make a contribution to the city.”

A February 2009 report by the NYC Labor Market Information Service confirmed that when compared to the nation’s labor market, New York City’s is more highly specialized in finance and insurance. But the report said the city is also home to professional, scientific, technical services, management of companies and other enterprises, as well as health care and social services.

According to Dan Fasulo, managing director at Real Capital Analytics, investment is more likely with Bloomberg at the helm. He tells GlobeSt.com, “Investors like certainty, and the re-election of Michael Bloomberg and the continuation of his administration’s sensible policies towards commercial real estate will give many the confidence to continue to commit capital to our great city.”

Others, including the city’s one-time development chief, say Bloomberg will use the next four years to continue efforts that in effect institutionalize things that he believes will help the city cope long after he’s not mayor. “We’ll probably see more of the kind of leadership he’s provided already,” says Steven Spinola, president at the Real Estate Board of New York, who ran what was then known as the Public Development Corp. under Mayor Ed Koch in the 1980s. Spinola tells GlobeSt.com that Bloomberg has a willingness to take responsibility, and that he’s done a great deal already to plan for the city’s future.

Pointing out the Bloomberg administration’s rezoning initiatives and its advocacy of cash-infusing planned developments in Coney Island, Harlem and the South Bronx, Spinola praises the mayor’s PlaNYC 2030 initiative and the increasingly vocal push toward energy sustainability.

“He’s also stated a willingness to be responsible for education, and this gives him another four years to utilize a very talented chancellor, who we can assume will continue to implement the changes to public education the mayor has been so strong on,” says Spinola. “There will be some confidence that Mike Bloomberg, as a clearly successful businessman, will be able to get us through the next few years, in relationship to the economic problems this city now faces.”

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