Any New Yorker can tell you that landlords are warehousing apartments. It’s plain in my building, and many others.
Of course the obvious question is, why doesn’t competition (aka The Magic Of The Market) cut the ground out from under any individual landlord who does that? The aspiring tenant just goes elsewhere, and the landlord has an apartment on his hands that’s not generating any revenue, while some other landlord is collecting the lost tenant’s rent.
And of course the equally obvious answer is, collusion; if all the landlords, or even most or many of the landlords do it, then artifical scarcity drives the price of on-market apartments up so much that it offsets the loss on apartments kept off the market.
Now real estate, in New York and probably elsewhere, is a clannish, insider business, where everybody talks to everybody else, so collusion is hardly far-fetched. But collusion on this scale, that requires something intuitively not in the individual landlord’s interest, seems to need more structure.
Well, it turns out — surprise — there’s an app for that. Enter RealPage:
To arrive at a recommended rent, the software deploys an algorithm — a set of mathematical rules — to analyze a trove of data RealPage gathers from clients, including private information on what nearby competitors charge.
For tenants, the system upends the practice of negotiating with apartment building staff. RealPage discourages bargaining with renters and has even recommended that landlords in some cases accept a lower occupancy rate in order to raise rents and make more money.
It’s so glaring that the DC Attorney General has filed a suit against a number of big real-estate operators using the collusion app:
D.C. Attorney General Brian Schwalb is suing 14 of the city’s largest landlords, alleging in a sweeping antitrust lawsuit filed Wednesday that they colluded with property management software company RealPage to artificially inflate rent prices by up to 7% across roughly 40,000 apartments in the District.
Schwalb’s lawsuit alleges that the defendants – including big names like Greystar, William C. Smith & Co., Bozzuto Management Company, and JBG Smith Properties – engaged in a price-fixing scheme by using RealPage’s “Revenue Management” Software to determine rent prices, effectively delegating their price-setting ability to a single entity rather than competing among each other.
In unity there is strength, it seems.
Bankers love these lorders rings
Office tower space?. always a sting