NEW YORK/LOS ANGELES (BLOOMBERG) – Apartment landlords in big international cities like New York and Los Angeles, where nightlife has gone dark and office workers are staying home, are losing tenants to their suburban counterparts.
Landlord revenue from rent collection in urban centres fell 1.4 per cent in June compared with a year earlier, according to data from RealPage, a real estate software and data analytics provider.
In the suburbs, revenue jumped 2.2 per cent. The gap is the widest there has ever been in data going back to the mid-2000s, RealPage said.
Many urbanites are becoming suburbanites, at least temporarily, moving to larger homes outside the city as long as they can work remotely.
At the same time, foreigners who normally keep Manhattan, Miami and San Francisco rental brokers busy have gone silent.
The shift comes as much of the appeal of living in dense cities is temporarily on ice, with nightlife shuttered and new anxiety about crowded spaces.
“If restaurants, bars and cultural experiences are not open and operating, the lifestyle appeal isn’t there any more,” said Mr Greg Willett, chief economist at RealPage.
“One of the reasons you pay expensive rents in these markets is the living experience.”
While New York is slowly reopening, with zoos and botanical gardens returning on Monday (July 20), restaurants remain closed for indoor dining.
California is reversing course after a surge in cases, closing bars and indoor operations at restaurants, movie theaters and other businesses.
Once people are comfortable standing shoulder-to-shoulder at a pub, cities will be hot again, according to Willett.
But with the virus now spreading across the US, that might take a couple of years, he said.
Metropolitan areas with the biggest annual rent declines in June, based on newly signed leases, were San Jose with a 14 per cent drop, San Francisco falling 12 per cent, and Los Angeles, down 9.5 per cent, according to RealPage.
Boston declined almost 6 per cent and the New York area slipped 2.5 per cent.
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