MANY ARE CHOOSING TO LEAVE
“New York is dying!,” exclaimed President Donald Trump during last night’s second presidential debate. And as the NYC housing market continues its steady decline, the toll that COVID-19 protections -- such as the Governor's Executive Order 202 and the Tenant Safe Harbor Act -- is taking on landlords has become readily apparent.
A survey conducted by the Community Housing Improvement Program (“CHIP”) found that while the number of residential tenants honoring their October rent obligations was marginally higher than the month of September, the vacancy rate significantly increased, which confirms that a growing number of residents are breaking or refusing to renew their leases and opting to settle elsewhere.
With governmental restrictions crippling the operation of businesses, including the entertainment, hospitality, and tourism industries, and with socio-economic policies that have gone terribly awry, many fear that the exodus has only just begun -- as renters see little upside to staying put or weathering the storm. Indeed, an estimated 1 in 4 of NYC rent-regulated tenants have not paid rent since March. That same ugly reality is also hitting commercial tenants, many of whom can no longer reconcile paying extraordinarily high rents particularly given the lack of the once-constant foot traffic. “Ghost town” has been the phrase touted by many to describe the New York street scene since March of this year.
These developments have left landlords “holding the bag.” With the vacancy rate nearly quadrupling over the last year, coupled with falling rental prices, CHIP has reported that an estimated 15% percent of local landlords will be in default of their property tax and utility payments by January, 2021, resulting in a sizeable revenue decrease for The Big Apple. In fact, the Real Estate Board of New York estimates that the sharp decline in real-estate investment and residential sales activity, thus far this year, has already triggered the loss of some $755 million in City and State tax revenue.
With landlords looking to elected officials to ease restrictions on moratoriums and rent-collection efforts, and tenants seeking the exact opposite, the victor of that battle is too soon to call. What is clear, is that the number of eviction cases that will inevitably be filed with our local landlord-tenant courts will be unwieldy and unmanageable, and the forced displacement of thousands of businesses and residents will only lead to further chaos, divisiveness, and economic uncertainty -- the likes of which our area hasn't seen since the Great Depression.