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.
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.