New York City’s status as a global center of commerce and culture is based on more than our growing economy, reputation for innovation and renowned institutions.
Lifelong New Yorkers and those new to the Big Apple rightfully expect the city to continue to be a thriving place to live, work, and raise a family.
For those expectations to be met, resources are required to cover the costs of public services that impact everyone’s quality of life.
That is why a new report featured in a recent Bloomberg News article showing that the sale of multifamily residential buildings collapsed to a near-decade low in 2019 should be a cause for alarm.
According to the report, there were only 290 multifamily sales last year, which represented a 36 percent decline year-over-year.
It was the first year since 2010 without at least 300 transactions.
The dollar value of such transactions also fell precipitously to just $6.91 billion – a 40 percent decline.
Overall, the declines were attributed to New York’s new rent laws, which limit the return property owners can receive from providing necessary renovations.
These figures are worrisome because, if they become a trend, they threaten the ability to support the quality of services to which New Yorkers have become accustomed.
The funding for basic municipal services is dependent on a thriving real estate industry. Our industry provides hundreds of millions of dollars each year in tax revenue – and these new figures are yet another example of declining tax revenue.
Investment sales like this are critical to generating tax revenue for New York.
Predictably, both the City and State’s coffers felt this decline. According to a REBNY analysis of investment sales, New York State received $45 million in tax revenue last year; New York City received just $180 million. Taken in tandem, the City and State collected a $150 million less in tax revenue compared to the previous year.
This has real impact on both the health of New York City and the long-term prosperity of its residents.
For example, that lost $150 million could have funded the starting wages of 3,525 police officers or 3,333 firefighters. It also could have covered the cost of 5,411 full scholarships to CUNY Hunter or another institution in the CUNY network. These are but a few examples of the ways in which that lost revenue could have been used to maintain and improve the five boroughs: the preservation and upkeep of public parks, renovations to subway stations, and other key infrastructure projects.
It is true that despite these warning signs, there is much good news to report about the City’s economy.
Key industries are attracted to our booming economy, and citizens from across the country and globe want to make the five boroughs their new home. But we cannot rest on our laurels.
This new data should help inform the development of public policy to address trends that will have a negative impact on the delivery of services every New Yorker expects and deserves.