New York Rents Plunge 12% In Queens

Today in "free-market capitalism actually benefits consumers" news, rents are being slashed across the board in Queens as landlords make concessions to deal with a supply glut and keep tenants renting. This lowering of rents taking place in Queens - to the tune of 12% YOY – was reported on by Bloomberg on Thursday morning:

For New York City apartment hunters, April was another good month to find a deal on rents. But no one fared better than those in northwest Queens.

Rents there dropped 12 percent from a year earlier, to a median of $2,646 a month after landlord giveaways were subtracted, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Those giveaways were offered on 65 percent of all new leases signed in the area, excluding renewals, a record share in data going back to the beginning of 2016.

The result from the price deflation that our Fed pins as the devil incarnate? More renters, more business and higher quality tenants:

The enticements brought in more renters. New leases in northwest Queens -- Long Island City, Astoria, Sunnyside and Woodside -- jumped 11 percent to 272, the firms said.

“More customers who were originally looking in Manhattan and Brooklyn are considering Queens,” said Hal Gavzie, Douglas Elliman’s executive manager of leasing. “It used to be just 100 percent a different consumer.”

New York City tenants are crossing borders to compare deals in a market groaning under the weight of new supply. Landlords, who’ve accepted they need to compete to keep their units filled, are working to attract new tenants and offering sweeter renewal terms to keep the ones they have, Gavzie said.

Who knew this could happen to industries and sectors where the government is not subsidizing or interfering with the pricing - and where free market capitalism is actually, in some facet, allowed to run its course?

The consumer now has the control because the concessions landlords are making are benefiting the them. Bloomberg continued:

In Manhattan, 44 percent of all new leases came with a landlord concession, such as a free month of rent or payment of broker fees. In Brooklyn, the share was 51 percent, a record for the borough.

Still, the number of new leases in Manhattan and Brooklyn fell 3.5 percent and 1.6 percent, respectively, a sign that renters there found good reason to stay in their current apartments, Gavzie said.

“Tenants negotiating a renewal, they’ve looked around to see what deals they can get,” he said. “So their landlord gives them a sweet offer to stay.”

Manhattan rents in April, after subtracting concessions, fell 2.2 percent, to a median of $3,236, the fifth consecutive month of year-over-year declines. In Brooklyn, where rents have also fallen for five months, the decline was 2.9 percent, to a median of $2,686.

This comes just about one month after we reported about downtown Manhattan basically turning into a ghost town due to just the opposite - prices rising and government overreach. Pricing out of tenants in some main downtown areas and shopping districts have caused vacancies in areas that have been occupied for decades.

The Fed loves to repeat how necessary and vital inflation is for economic prosperity, but in the case of midtown Manhattan's "prime" retail real estate, it is doing nothing but helping cause once extremely prominent shopping areas become the very same "ghost towns" they turned into during the 2008 housing crisis.

Mayor DeBlasio's asinine solution to this issue created in part by faulty government policy: more government and more regulation.

So much for the recovery.

As if brick and mortar retail didn’t have enough problems to deal with being methodically decimated by the ever growing behemoth that is Amazon, store owners are now facing rent that is simply so high it makes it impossible for most to open retail stores and do business in once prominent areas of downtown Manhattan.

Last month, the New York Post wrote an article confirming our writeup from late March suggesting that high prices are driving businesses out of town:

If you want to see the future of storefront retailing, walk nine blocks along Broadway from 57th to 48th Street and count the stores.

The total number comes to precisely one — a tiny shop to buy drones.

That’s right: On a nine-block stretch of what’s arguably the world’s most famous avenue, steps south of the bustling Time Warner Center and the planned new Nordstrom department store, lies a shopping wasteland.

To be sure, none of this comes as a surprise to us - or our regular readers - because in late March we recalled our own 2009 tour of Madison Avenue to discover that it also had turned into a ghost town. Just a week ago we told our readers that the ghost town that was New York's "Golden Mile" was not surprising: after all the US economy had just been hit with the worst recession since the Great Depression, and only an emergency liquidity injection of trillions of dollars prevented a global financial collapse.

What is more surprising is why nearly 9 years later, at a time of what is supposed to be a coordinated global recovery, a walk along Madison Avenue reveals the exact same picture.

We would love for these two sets of facts to bludgeon the government and regulators over the head and make them realize that inflation isn't the solution. Rather, they should realize from this that deflation can actually be a reward for capitalism, causing prices to fall, increased competition between sellers, and benefits for buyers.

Comments

deja IridiumRebel Sun, 05/13/2018 - 16:50 Permalink

More like $2000 - $2500 for an apartment.  It's still a nice area, but the lack of transportation and distance from Manhattan has kept the rents down.  Anything with a single seat, half hour or so ride into the city is where most of the insanity has been. 

I moved out of state and I'm sure my landlady was dancing in the hallway for what she could get now for my shithole apartment in a shithole neighborhood whose new occupants will presumably be riding the Johnny Rocker special ("Imagine having to take the 7 Train to the ballpark looking like you're riding through Beirut next to some kid with purple hair, next to some queer with AIDS, right next to some dude who just got out of jail for the fourth time, right next to some 20-year-old mom with four kids.") to work every day.

In reply to by IridiumRebel

brushhog JimmyJones Sun, 05/13/2018 - 19:39 Permalink

Rents go down and everyone is surprised except the people that actually own real estate there. I was in Queens a few years ago looking at all the new residential buildings in Long Island City. A realtor told me to look up at the apartments that have white pull down shades....all of them are vacant. It was like 30-40%. I asked how the hell they can ask so much in rent and condo sales if the demand isnt there. He explained that the owners will keep the number high as long as they can, in the mean time they can borrow against a higher valued asset as long as they collude to hold the prices up.

They'll probably let the prices fall to market value right before they default on their fugazi loans. Its all a rackett.

In reply to by JimmyJones

Endgame Napoleon GooseShtepping Moron Sun, 05/13/2018 - 16:22 Permalink

As far as the reduction in residential rent in Queens is concerned, yes, copy them since too-*******-high residential rent is one of the biggest problems in the country. But we do not need echoes of the inflated retail rent and the fines on commercial property in Manhattan.  

Everyone in Queens must be a programmer, in the medical field or in some profession where wages are sky high. In my part of the country, for people with less lucrative degrees and professions, that reduced-cost rent in Queens exceeds monthly pay. 

In reply to by GooseShtepping Moron

edotabin GooseShtepping Moron Sun, 05/13/2018 - 17:02 Permalink

You'd think the rent game would be decent housing for a decent price to a decent tenant. Seems simple enough doesn't it?

But NOOOOOOOOOO!!!!!

You've got some shitty landlord who doesn't care asking too much rent from a tenant that thinks he's God's gift to the planet and is just itching for a reason to start shit.

Add the international crime syndicate known as property managers into the already volatile situation and you've got shit waiting to happen.

Add "someone" who wants to save their pension fund by raising property taxes and it starts getting real interesting.

Pretty soon people start to realize this isn't about owning a home or having a home. It is some cruel competition for financial supremacy.

Money and contacts cannot take the place of decency.

In reply to by GooseShtepping Moron

Davidduke2000 Sun, 05/13/2018 - 17:30 Permalink

there will be vacancies everywhere in the us in commercial and in residential, also real estate in general will crash by over 50% as municipalities live on a different planet and are increasing taxes like there is tomorrow.

When the depression arrives, it will be why more severe than 1929 and homes who have 50% equity will be taken by municipalities because people would not be able to pay the taxes, so I expect a lot of home burning so the only taxes to pay would be for the land.

stefan-coast Sun, 05/13/2018 - 19:30 Permalink

queens...hah.   mama mia mama mia...just find me someobdy to love. I would really like to see freddy mercury and danny kaye in a concert...fully dressed I would hope. :-)

francis scott … Sun, 05/13/2018 - 20:35 Permalink

inflation in downtown Manhattan has kept retail property vacant in areas once occupied for decades. 

But don't deceive yourselves.  Thanks to all the

Magical Negro's, and now the Trumpian Wars,

our economy is still second to none.  

 

So what if franchises are going out of business

left and right? 

 

As long as we can muscle NATO, the EU, the 5

Eyes, etc., etc., to buy our MIC's missiles, with

their guaranteed hit rate of close to 50%, we

be the Stylin' Empire until the world collapses

around us.

 

Word