It seems to me like in big cities, as this article describes what eventually will happen is the rich will buy up the property because nobody else can afford it, service workers won't be able to actually live within a reasonable distance in order to work there, and the city will exist mainly for 1) wealthy professionals, 2) people who use real estate to park their money, and 3) tourists. Regular working-class folk disappear.
When one visits the city in the daytime, it seems like it has activity because of the tourists, but it has no real indigenous activity.
Perhaps that's the steady state, because there are enough tourists to keep the city going economically.
Anecdotally, that doesn't really seem to be the problem with New York and definitely not the problem the article is talking about.
Ground-level stores don't seem to be suffering from staffing issues, largely because in New York it's not uncommon to work in Manhattan but live in Staten Island or Jersey.
Instead, ground-level stores seem to be disappearing because commercial lease agreements are just insanely expensive and onerous. Landlords refuse to reduce rents (for several purported reasons) in an increasingly buyer-friendly real estate market.
Yep. Walk down Bleecker St where my parents used to hang out in the 80s and it's a ghost town. Apparently the historic neighborhood designation means it takes over 10 months for any lease application to close, as it needs to be approved by the historic neighborhood board. Once approved, it often requires a significant amount of capital to build the proposed establishment in a compliant way. Businesses don't even bother trying.
> And, this feels like an issue that will naturally fix itself over time, as landlords realize what they're asking for isn't reasonable.
Except it won't, exactly because landlords are rational actors. Let's say the upkeep for a space is $400/mo, and the rental for that same space is 3000/mo. A storefront could be vacant for 2 years and a landlord would still turn a hefty profit if they were able to get someone to sign a one-year lease after the 2 years of vacancy.
NYC is a big place- for every 30000 people that think that the rent is unreasonable, there's 1 person who thinks that it is, and landlords only need that 1 person. Renters have no leverage here.
This is why property and land taxes are good. Land is, as they say, the only thing they're not making any more of. If you're owning it and not putting it towards any productive use you ought to pay back into the commons for the lost utility.
"Hefty profit"? I don't see how that is good investing -- properties sell based on yield. If someone buys a prime property and it generates 3 or 4% per year.. then they're not going to let it sit empty for two years.
Renters do have leverage here. You're not going to get it for $1000, but you might for $2500 or $2200.
I don't have a super great understanding of real estate, so my example might be over simplistic and flat-out wrong. This article has better explanations for why vacant spaces remain vacant in NYC (although it applies more to commercial than residential):
Trust me, as a resident, this phenomenon is real. There are a number of stores in my neighborhood that have been vacant for literally the entire time I've lived in the area (~ 2 years).
As a general rule of thumb, renters (both commercial and residential) really don't have much leverage in NYC, except under extremely rare circumstances. It's hard to understand unless you actually live here, but the rule governing real estate elsewhere in the USA don't really apply here.
This idea presupposes that owners are looking to be landlords.
There is so much cash floating around the high end of the economy, thanks to QE and tax dodging and everything you've heard about, that RE is purchased simply as a way to diversify holdings beyond stocks & bonds. It never has to be used.
This is exactly what is happening in Vancouver. The rich have parked their money in downtown real estate, so the working class is being pushed further and further out of the downtown district.
Those have to be really big cities, because in cities with reasonable public transport you can hop on a train or a bus from basically anywhere within city limits and reach the expensive center in less than half an hour.
Does NYC qualify? I think you can still hit theoretical under-half hour times if you manage to get the subway right as your train comes in and don't have to walk too far from the stations to the doors. But if you live in New York the psychological barrier of dealing with that crap is big enough that people tend not to do it outside of commuting. It's a chore to get someone in Brooklyn to come into the city to hang out unless it's right after work. And vice versa.
NYC has some of the best, if not the best, public transport in the US.
> It's a chore to get someone in Brooklyn to come into the city to hang out unless it's right after work. And vice versa.
The issue, I think, is that young professionals have largely been priced out of Manhattan, and the East River acts as a psychological boundary. Even if it's just a short trip, you're still leaving/entering "the city".
As a side anecdote, the club Maxwell's in Hoboken closed a few years ago; the reason given was that most of the bands that played there were willing to cross one river to play a gig, but only a small fraction were willing to cross both, even though the trip wasn't substantially longer.
When one visits the city in the daytime, it seems like it has activity because of the tourists, but it has no real indigenous activity.
Perhaps that's the steady state, because there are enough tourists to keep the city going economically.