New York City is a more desirable place to live, work, and visit than ever before—and for good reason.
Our economy is booming, unemployment is historically low, and leading industries are setting up shop in the five boroughs. Last year we broke another tourism record by welcoming 65.2 million visitors. Maintaining this momentum is critical.
That’s why one should view with concern the recent First Half Investment Sales report that REBNY put out that shows the City’s investment sales market is performing even worse than it did last year.
That is troubling news not just for the real estate industry but for New York City as a whole.
The report clearly demonstrates that the investment climate has significantly cooled, and multifamily properties in particular are experiencing a major slowdown.
The total number of transactions in the five boroughs over the studied period was down 17 percent, and there was a particular decline among multifamily residential properties, which declined by 31 percent in total sales and 37 percent in terms of total consideration.
This drop in investment sales should set off alarm bells for its impact on New York City’s tax revenue. A recent REBNY analysis based off this data highlights that the decline resulted in $66 million lost in investment sales revenue for the city.
Put another way.it could have funded the hiring of 1,550 police officers at a starting salary of $42,500 or 1,460 firefighters at a starting salary of $45,196.
Tax revenue from investment sales also goes to the MTA. The loss for the MTA, which totaled over $25 million over the studied period, is even more acute. Per the MTA’s 2018 budget, that $25 million would cover the months of December and January’s weather emergency fund.
In other words, funding for basic municipal services takes a hit when investment sales decline. The real estate industry’s health is vital to the health of the city, as the tax revenue it generates for the city is used to support essential public services like the salaries of first responders, the maintenance of public parks, and vital repairs to the subway system.
With that said, the reality is that demand to live and work in the five boroughs remains strong. What this new data does show, though, is that a looming threat to New York’s continued success is public policy on a federal, state and city level that will make New York City a less desirable place to invest.
After all, that investment generates the tax revenue that helps to make the Big Apple the Big Apple in the first place.