Home renters and businesses of all sizes are feeling the squeeze of soaring rents across the United States’ largest metropolitan areas.
Ecommerce has long been ascribed as the killer of brick-and-mortar retail, but the price of staying in business is also contributing to closures across the country. Menswear retailer Barneys recently had annual rent raised by more than $11 million on its Manhattan flagship location and has been forced to consider several options to cut back costs.
Steven Kalifowitz, President of Localize.City, a software technology startup that uses AI to give prospective home renters and buyers a wealth of high-level data insights, has followed the volatile New York City real estate scene.
“A place like Barneys can get really squeezed because a landlord wants high rent and because so many of these landlords have been here for so long, they don’t mind keeping a store empty for a certain time until they can get the right price.” Kalifowitz said. “The landlords in New York City are less concerned about month-to-month income when they can get such a big jump from someone else. And they have the cashflow to wait.”
Also contributing to the increase in rent prices is an imbalance of access to information on properties between landlords and renters.
“Until now, there’s been a large asymmetry of information. The people who own properties know a lot more than those who don’t. With that asymmetry going away, it’s changing how people are able to find properties and negotiate them,” Kalifowitz said.
Technology may be giving power back to buyers, but retailers are still at the moment fighting a two-front war against ecommerce competitors and leverage-holding landlords.