New York City’s real estate market, which functions as a prime source of tax revenue for the city and the state, is being crushed as many businesses and resident are simply refusing to pay their rent. According to The Daily Mail, in April the city and the state collected $78.5 million in tax revenue on the sale of commercial and residential properties, a shocking plunge from $217.5 million in March.
Resident have fled their homes in the city to stay elsewhere; many businesses simply haven’t made their payment; one commercial landlord said 80% of their retail tenants missed rent payments in April and May.
On Wednesday, Real Estate Weekly noted, “The Real Estate Board of New York (REBNY) reported that tax revenue generated from investment and residential sales in New York City and New York State decreased by 48 percent from April 2019 to April 2020, and 64 percent from March 2020 to April 2020. These decreases represent a nearly $72 million loss in tax revenue for the City and State year over year, and a $139 million decrease from month to month.”
James Whelan, President of the Real Estate Board of New York, said on Wednesday, “This dramatic loss in tax revenue is alarming. The real estate sector is the city’s economic engine. The pandemic has caused that engine to stall and we should expect such alarming trends to carry through May and June in the best-case scenario.”
Jay Martin, Executive Director for the Community Housing Improvement Project, echoed, “There are hundreds of buildings in New York City operating at a loss because of COVID-19, and many of them will not be able to survive another month without help. If officials do not immediately target relief to lower-income renters and small owners who have mounting monthly expenses, they will not be able to reverse the damage this crisis will have on our city.”
“Leasing and new rental inventory hit record lows in late March and April after Gov. Andrew Cuomo imposed stay-at-home measures on New York State, which prohibited real estate brokers from showing apartments in person. Listing website and data a ggregator StreetEasy released data Tuesday showing that new rental inventory has risen from 1,750 listings during the last week of March to nearly 5,000 listings the week ending May 10,” The Commercial Observer reported on Thursday.
The Commercial Observer added, “The number of new leases signed in April also cratered, reaching the lowest level since the Great Recession. Leasing declined 71 percent year-over-year in April for Manhattan, from 4,831 leases signed in April 2019 to 1,407 in April 2020. Brooklyn experienced a 69 percent year-over-year drop in new leases—to 439 from 1,323 last April—along with a 28 percent slide in new rental inventory.”
The Daily Mail noted that Vorndado, one of the city’s biggest landlords, revealed 80% of its retail tenants did not pay rent in April and May, and Empire Realty Trust said 25% of its office tenants skipped paying rent.
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