One of the most iconic, if not the most iconic, cities in the world, New York City is both one of the most coveted cities to live in and the most expensive places to reside. According to a 2019 Kiplinger study, Manhattan, one of the five boroughs of New York City, was the most expensive place to live in the entire United States, being 148% more expensive than the average cost of living in a major city in the United States. Suffice to say, NYC is one expensive place to live. But why is life in NYC so costly? Lindsay Guion is the Founder and CEO of GUION PARTNERS INC., a leading consulting firm involved in talent management, representation and acquisition, music publishing, and entertainment tour opportunities. He uncovers the factors that influence the cost of living in New York City.
Limited Residential Space
If you look at NYC’s geographical outlay, says Lindsay Guion, you quickly realize expansion space is a major issue. Take Manhattan Island, for instance. As an island, there is literally no room to expand. As pressure on housing grows, the natural result is prices will go up.
Secondly, zoning laws make it difficult for new high-rises to come up. For example, if you want to build an apartment block in NYC, you need to ensure there are close to two parking spaces for each apartment you build. This means constructing a multi-story basement parking structure, something that dissuades many property developers from entering the NYC market.
NYC’s population growth is somewhat of a misnomer. From 2010 to 2018, population only rose by 2.7%. However, considering space constraints, this had a disproportionate effect on the city’s resources. For example, as the population grew, competition for housing increased, driving property prices up. Similarly, businesses like restaurants also saw a spike in the number of patrons, which also served to push up the cost of eating out. With a domino effect, a rising NYC population will continue to drive up the cost of living in the city into the foreseeable future.
In 2018, notes Lindsay Guion, NYC broke its ninth consecutive record in number of tourists by recording 65.2 million tourist visits for the year. This mind-bending number of tourists come with money to spend. With such a massive influx of resources, prices are bound to surge. For example, visiting tourists will want to eat out, hail Ubers, and stay in local hotels. As a result, the prices of these services will go up due to the massive demand. For NYC residents, this means a higher premium on the cost of living, a likely downside to being one of the most popular tourist destinations in the world.
Finally, higher-than-average wages play a part in driving up the cost of living in NYC. With major companies from around the world setting up shop in NYC, their employees, who are often well-compensated, will use their considerable resources to pay higher rates within the city. Add to this the high number of millionaires, billionaires, and other high net worth individuals who call NYC home, and you get a cocktail of high-wage individuals able to absorb an ever-increasing cost of living. For native New Yorkers, this is a significant challenge, says Lindsay Guion. However, for those who manage to earn these high wages, living in New York City can be the experience of a lifetime.
Lindsay Guion’s Final Thoughts
While New York City is one of the most expensive cities to live in, it is also one of the most desirable. Why? New York City is and probably always will be known as the city that never sleeps. Lindsay Guion states that while the city is an expensive place to live, the trade offs are the professional opportunities, entertainment options, social status, and immense cultural diversity.