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More than four years after the onset of the pandemic, the verdict is in: Gen Z loves New York City life. And that\u2019s tough news for renters.<\/p>\n
The pandemic steered generations old and young away from central business districts. With the promise of remote work and fewer options to access dining, entertainment, and other commercial spaces, 2 million Americans fled large urban counties between 2021 and 2022, according to a study by the Economic Innovation Group<\/a>.<\/p>\n But some millennials and even more Gen Zers bucked that trend and have made their way back to America\u2019s biggest cities\u2014and it\u2019s led to the lowest vacancy rates in New York City since 1968, data released by the city on Thursday. The portion of rental properties that were vacant and available plummeted to 1.4% in 2023\u2014making it the worst housing crunch in Gotham in the past 50 years.<\/p>\n Between 2021 and 2022, more than 42% of people moving to New York City were Gen Zers and 39% were millennials, according to Census Bureau data<\/a>. What\u2019s more is that major metropolitan areas overall, including NYC, are seeing population losses among all generations\u2014with Gen Z as the big exception, a Today\u2019s Homeowner report<\/a> shows.\u00a0<\/p>\n \u201cYounger generations certainly constitute a significant portion of those returning to the city for its social, cultural, and convenience appeal,\u201d Jason Bordainick, co-founder and managing partner at NYC-based Hudson Valley Property Group<\/a>, tells Fortune<\/em>. \u201cWhether working in-office or remotely, the appeal of urban living, especially in Manhattan, remains strong.\u201d<\/p>\n To put things in perspective, housing experts consider a \u201chealthy<\/a>\u201d or normal vacancy rate to be in the 5% to 10% range. Higher vacancy rates tend to benefit tenants more than landlords. When vacancy rates are higher, it\u2019s easier for people to find apartments\u2014but that means landlords have to woo tenants with lower rents or other incentives.\u00a0<\/p>\n The release of the latest vacancy figures has alarmed NYC leaders, many of which are calling for more housing\u2014particularly affordable housing.<\/p>\n \u201cThe data is clear: the demand to live in our city is far outpacing our ability to build housing,\u201d New York City Mayor Eric Adams said in a statement<\/a>. \u201cNew Yorkers need our help, and they need it now.\u201d<\/p>\n With a vacancy rate as low as New York City\u2019s, it\u2019s no surprise that rental costs are also skyhigh. The average rent for a 700-square-foot apartment in New York City is more than $4,700, according to RentCafe<\/a>, and only 1% of apartments are less than $2,000 per month. By comparison, the average rent for all of the U.S. is just $1,700. A lack of housing supply is only exacerbating rental costs, experts agree.<\/p>\n \u201cThe biggest underlying factors that NYC has always struggled with in terms of housing production is the high cost of land and our extremely long development cycle,\u201d Danielle Ash, a NYC-based real estate lawyer with Adler & Stachenfeld<\/a>, tells Fortune<\/em>. \u201cWe have a complex regulatory landscape that makes it hard for developers to build quickly and efficiently, so the only way to spur development is a loosening of such restrictions, faster pace of approvals and\/or providing incentives to make the financials of each project work.\u201d<\/p>\n Low vacancy rates, high rental prices, and few options for affordable housing has also only made worse the city\u2019s homelessness problem. There has been a \u201cmassive influx of migrants in desperate need of housing that require the city\u2019s resources,\u201d Ash says. In all, the city needs hundreds of thousands of additional housing units to catch up to their housing shortage. In September 2023, Adams unveiled an overhaul of NYC\u2019s housing system that could make way for up to 100,000 new homes in the next 15 years<\/a>.<\/p>\n But aside from city-based programs, it\u2019s not as appealing for developers to build completely new housing in NYC due to its high costs and steep regulations.<\/p>\n \u201cAs for creating more housing, developers need financial incentives due to the exorbitant costs associated with building in NYC,\u201d YuhTyng Patka, another NYC-based real estate attorney with Adler & Stachenfeld LLP<\/a>, tells Fortune<\/em>. \u201cNYC is a highly regulated market and that comes at a high expense to owners and developers.\u201d<\/p>\n Beyond<\/a> building more housing, rent control is also critical for people looking for affordable options. While many units in NYC are rent-regulated based on income, it\u2019s not enough to make city living accessible to everyone.\u00a0<\/p>\n \u201cThe current situation highlights the pressing need for a reassessment of recent rent controls and regulations,\u201d Bordainick says. \u201cSome of these measures have inadvertently discouraged investment in housing, exacerbating the shortage. It\u2019s imperative to reevaluate policies to ensure we are fully leveraging the private market to provide more capital investment into housing.\u201d<\/p>\n Even with rent as high as it is in NYC and increased competition for even finding a unit, the city remains a place of promise\u2014even though it\u2019s, in many ways, wildly different from living in other metropolitan areas across the country.<\/p>\n \u201cNYC has been and will always be a destination city for dreamers,\u201d Patka says. \u201cNYC will continue having a robust demand for housing for the foreseeable future, [but] the lack of affordable housing [could] turn away the very talent that NYC attracts which makes it such a special city.\u201d<\/p>\n<\/div>\nLower vacancy rates mean even pricier rental costs<\/h2>\n
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