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New York City is experiencing a record number of apartment vacancies due to the exodus of residents amid the coronavirus pandemic.
Contrary to predictions that the thousands who left the city in March and April would return by summer, the latest data confirms what landlords are feeling. More than 13,000 Manhattan apartments sit empty, the highest number in 14 years, according to a report from Douglas Elliman and Miller Samuel.
The COVID-19 lockdown and its aftermath, coupled with protests that led to widespread looting and a growing level of crime as the police department came under attack, have sparked an escape by residents. The drop in business, the travel restrictions discouraging tourists and a lack of positive leadership under Democratic Mayor Bill de Blasio, have also exacerbated the problem.
A sudden inventory surplus of real estate has triggered a slump in rental prices, dropping 10%, with landlords struggling to entice renters, offering an average of 1.7 months with no payments in order to get leases signed and fill up empty buildings.
According to the Douglas Elliman data, there was a drop of 23% in the number of new leases being signed in the city as the number of apartments available for rent hit 13,117, compared with 5,912 that were listed for rent last July.
While the average price of a Manhattan apartment in July 2019 was $4,292, that has seen a hit this year as the average is now about $$4,031. The average rent prices in Brooklyn largely remained the same, but total market inventory shot up by a staggering 84.2%.
“The outbound migration is higher than the inbound migration right now,” Jonathan Miller, CEO of Miller Samuel, said, according to CNBC. “This could be a difficult couple of years for landlords.”
The data does not reflect numbers of residents who are currently living in second homes, outside of the city. Their absence may not be hitting the real estate market but businesses certainly experience a loss in revenue as sales become nonexistent.
Governor Andrew Cuomo recently pleaded with wealthy New Yorkers to return from their vacation properties and second homes as the city desperately needs the income. He even offered to buy them a drink and make some lunch.
New York City faces a $30 billion deficit in the wake of the pandemic and it seems the Democratic leadership may be reaping the consequences of months of leftist policies that allowed looting and rioting to go virtually unchecked following the death of George Floyd in Minneapolis in May. And now lawmakers are pushing for raising taxes on the wealthiest residents to offset the shortfall.
Business owners are reportedly escaping Manhattan as their shops and restaurants have become “unsustainable,” as reported by BizPac Review. Major retailers, many with flagship stores in New York City, have not reopened and are focusing on their businesses in other cities and states where the lockdowns have not been as stringent.
Meanwhile, de Blasio came under fire again this week as he was accused of making the rounds in a New York City neighborhood as simply a “photo op mission” and was called out for turning his back on a bakery manager, walking away with no solutions.
De Blasio slammed for appearing to dimiss pleading bakery manager who tells him business is struggling https://t.co/HvyQ8hZJkS
— Conservative News (@BIZPACReview) August 13, 2020
New York’s wealthy Upper East Side, which has seen a 39% fall in new leases, has also reportedly seen a recent shocking spike in crime. The New York Police Department’s 19th Precinct reported that the area, which is home to billionaires like Glenn Dubin, Henry Kravis and John Paulson, experienced a 286% jump in robberies compared with the same time period last year.
The concerns over the drop in real estate in the city stands to have a ripple effect on the area which was initially the U.S. epicenter of the coronavirus outbreak.
“Housing experts estimate that about half of Manhattan’s apartment rentals are owned by small business owners, rather than large publicly traded companies or the big, well-funded real estate families,” CNBC reported.
Landlords unable to rent out properties will likely fall behind in paying their taxes, which account for New York City’s largest source of revenue. And a decline in the city’s revenue will only end up hurting the remaining residents who will then see a cut in services.
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