A 19-page essay by New York City artist Josh Kline lamenting the state of the art world has gone viral.
“New York Real Estate and the Ruin of American Art” argues that the city has become too expensive for artists to forge a career here. I was expecting Kline to blame the real estate industry, but he mostly didn’t.
Unfortunately, this part of his explanation missed the mark (and he shouldn’t have attempted one, because he’s an artist, not an economist):
“New York City’s runaway real-estate prices, and the unaffordability of housing nationwide, are a result of epochal transfers of wealth from the middle and working classes and the poor to the rich during the 2008 financial crisis, the ensuing recession, and the pandemic.”
New York City has 3.7 million housing units. The U.S. has 148.7 million. The concentration of wealth among the top-earning 1 percent, or even the top 10 percent, cannot explain why most of those homes have become harder to afford.
Assuming the 1 percent own an average of two homes, they would account for only 2 percent of dwellings. The other 98 percent have become less affordable largely because demand has outpaced supply.
Also, the Great Financial Crisis did not make income inequality worse. Quite the opposite. It made the 1 percent poorer (temporarily). It also made housing less expensive, as home prices plunged 30 percent when the bubble burst. Unfortunately, mortgages were hard to get, so few could seize the opportunity.
Let’s get back to Kline’s thesis. He says the city’s high housing costs make it hard for artists to scratch out a living. Those who work other jobs have little time to make art, and even if they had time, high studio rents make it hard to find space.
All true. The days when upcoming artists could find cheap space in neighborhoods abandoned by industry (Soho, Hell’s Kitchen, Long Island City, northern Brooklyn, Gowanus, Red Hook, etc.) are largely gone. This happened as the city added about a million jobs, but not a proportional number of homes.
Kline does get the economics right in a footnote about the 1960s and 1970s:
“The cheap rents and overall inexpensive cost of living at the time for artists living and working in Manhattan were a consequence of massive white flight into the suburbs and the deterioration of New York’s urban fabric that resulted from the evisceration of the city’s tax base,” he writes. “If so many middle-class and wealthy white people hadn’t left the city, there would have been much greater pressure on the prices and rents.”
But he seems naive as he wonders why vacant office space hasn’t been repurposed for artists:
“The upper floors of older commercial buildings are rife with empty offices abandoned in the shift to hybrid work. With all this empty real estate, why aren’t we living in a new golden age of DIY project spaces and experimental art? Why aren’t New York’s empty offices filled with art studios?”
“One answer is that the city of New York’s tax policies make it more profitable to leave commercial space empty than to lower the rents.”
Um, which tax policies do that?
Landlords do reduce rents when vacancies rise, but if rents for art studios are too low to save a building from foreclosure, owners won’t bother. Renovating to attract office tenants or converting to residential are usually better options.
Kline’s other suggestion makes more sense: He advises struggling New York artists to move to his native Philadelphia.
What we’re thinking about: Should supply skepticism be added to the DSM? Send thoughts to eengquist@therealdeal.com.
A thing we’ve learned: The phrase “starving artist” dates to the late 18th and early 19th-century Romantic movement in Europe and was popularized by Henri Murger’s 1851 work Scènes de la Vie de Bohème, according to Wikipedia.
Elsewhere…
Despite city and state laws outlawing discrimination based on source of income, it’s still hard for voucher holders to rent an apartment desired by tenants who can pay their own way, one landlord emailed me.
“Most people will not admit this publicly but they really do not want vouchers and subsidized people in their building, and as a result, they quietly market off-book,” she said, meaning without listing the unit.
“For those people that are walking around with subsidized vouchers, no one really wants them because they come to the table with social issues, plus they carry the possibility of government-issued voucher cancellation,” she continued. “So, bottom line, for people with subsidy there are very few apartments available.”
The flipside: “For the people that work and have savings put aside and a good track record, there seem to be a lot of apartments to choose from — many more than what are publicly known.”
This seems plausible. Given how hard it is to evict problematic tenants, landlords choose carefully.
Closing time
Residential: The largest residential sale Thursday was $38 million for a 7,500-square-foot co-op at 740 Park Avenue in Lenox Hill. The unit last sold for $20.5 million in 2019.
Commercial: The largest commercial sale was $76 million for a 142-unit apartment building at 34 Berry Street in Williamsburg. Delshah Capital purchased the property from LCOR.
New to the Market: The highest price for a residential property hitting the market was $13.5 million for a 5,262-square-foot condominium unit at 76 Crosby Street in Soho. The Gold Team at Corcoran has the listing.
— Matthew Elo
