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As the global pandemic unfolded last spring, Hell’s Kitchen was at the center of world news — the Javits Center became an emergency field hospital, USNS Comfort docked at Pier 90, Times Square was empty, Broadway dark and Hudson Yards mothballed.
With over half of the neighborhood employed in the creative and entertainment sectors (especially supporting Broadway/Off-Broadway), it’s probably no surprise that when the figures for the 2020 New York exodus are being reported, Hell’s Kitchen is at the top of the list.
CBRE, the world’s largest commercial real estate services company, has delivered a report — COVID-19 Impact on Resident Migration Patterns. Using US Postal Service data on 29 million change-of-address filings across the United States, it found that New York City had the second-largest increase in net move-outs in 2020, behind San Francisco. Our neighborhood was at the top of that list.
Hell’s Kitchen is made up of three zip codes — 10018 to the south, 10036 in the middle and 10019 to the north. It was 10019 that saw the largest migration of residents from New York’s 145 zips in 2020. It lost a net 3,935 residents last year, compared with just 763 in 2019. Over 11,500 folks left the area, with just over 7,500 moving in.
The percentages were even starker in zip code 10036, where 85 more people per 1,000 residents left the neighborhood in 2020 compared to 2019. In 10019 that factor was lower, at 75, and in the city the overall number was 25. The lower population in 10036 (24,435) compared to 10019 (45,334) meant the net outflow of residents in that zip was lower, at 3,105.
The study excluded any zip codes with fewer than 10,000 individuals — and the 10018 zip code fell below that level at just over 5,000 residents. Even taking into account that these zip codes stretch to 5th Avenue, the overall net outflow from Hell’s Kitchen last year was over 7,000 people. When you consider the huge luxury buildings like SKY on W42nd Street and The MAX on W57th Street have more than 1,000 units, the 7,000 figure is staggering!
The report does not take into account those who left the city for a second home during the pandemic (and didn’t need to inform USPS). Hell’s Kitchen is nearly 80% rental apartments, which has allowed for the population to be more transient as lease renewals came up during the pandemic. The market has been flooded by property developers offering rental incentives of 3-month (sometimes up to 5-month) rent-free deals on apartments, in addition to incentives like paying for moving costs.
Last week, another report — Homeward Bound — also measured the exodus from New York during the pandemic, but said that this month the city would return to having as many arriving in the city as leaving — for the first time in over a year.
“this month the city would return to having as many arriving in the city as leaving — for the first time in over a year.”
I’ve said it 100 times, I’ll say it again…It’s going to be a really fun summer.
Though not surprising that residents left in droves when their leases expired. Many developers refused to negotiate lower rents for existing tenants during a current lease or renew the expiring lease during the pandemic. Additionally, what many fail to consider and what’s not depicted accurately is the “free months,” or other concessions are generous. However, the base rent is at pre-pandemic rates (higher) or post-pandemic projection. This way, your net rent may be lower during your tenancy, but when the lease expires, you’ll be facing a rent increase to the base amount, which would subject the tenant to a higher than expected renewal rate. It’s just something to keep in mind, in another year (or two), we will again be facing another jolt in the numbers.