Since their 1937 introduction in New York City by former Mayor Fiorello H. LaGuardia, taxi medallions have risen steadily to become one of the most valuable commodities currently available in the American marketplace. Far exceeding gains of the NASDAQ, which is up 22 percent year-over-year, the S&P 500, up 21 percent, and the Dow, up 18 percent, the price of these coveted medallions jumped 49 percent in the last 12 months.
Ownership of a medallion equates to the legal right to operate a yellow, for-hail taxi in Manhattan’s central business district and at New York City’s two international airports. The initial public offering price for medallions was just $10, or just under $160 in today’s dollars. Adjusting for inflation, that’s a 656,150 percent increase over the last 76 years. Today, there are 13,336 medallions on the market.
Medallions can be purchased at public city auctions or via web markets like NYCCityCab, where the cheapest New York City medallion listed in the last year was $670,000 on April 5. Imran Khan’s July 11 $1.13 million listing of an unrestricted license with no summonses had the highest going price for that market this year.
For comparison, they trade for around $625,000 apiece in Boston (one handicapped-accessible van and Boston medallion was listed at NYCTaxiCab.com for $600,000 last November), and in San Francisco, they are valued at around $300,000, according to an April 10 post for Priceonomics.com by Rohin Dhar
A report by ConvergEx New York’s Nicholas Colas concludes that the most recent price surge was assisted in part by a strong economy “for those inhabitants who can afford the service,” and the emergence of new technologies that have greatly eased the process of hailing and paying for a cab in Manhattan.
“What I find most interesting,” wrote Colas, “ is the fact that technology – credit cards and smartphone apps – have served to enhance the value of the status quo rather than its customary role as ‘Disruptor’ […] both materially increase the value of owning a medallion.”
Another new report by the New York City Taxi & Limousine Commission shows that the average price of independently sold medallions rose $250,000 since January to $1.05 million from $800,000, and the price of corporately-sold medallions has risen to $1.32 million from its January price of $1 million. This data includes 75 independent transfers and 18 corporate transfers.
Sam Greenbaum has been a medallion broker in New York City for about 10 years now. He earns a broker’s fee of around $4,000 per medallion sold, and currently has two on the market, one of which he listed on September 17 for $1.05 million.
Greenbaum acknowledged the influence of emerging technologies as a catalyst for increased medallion prices, but says, “Everything boils down to supply and demand; there are more buyers than there are sellers right now.”
“Obviously, the buyers can make enough money to pay the loans they take out on these things,” he added, explaining that this is more true now than ever, due to the price increase of the past twelve months.
When city commuters are strapped for time and public transit won’t do, the only real competition for yellow cabs is the large number of unlicensed cars that roam the streets and are easily identifiable by their license plates, which almost always begin with a T and end with a C, and their tendency to honk their way down the streets with eyes darting from pedestrian to pedestrian, eager for a nod and a hurried change of trajectory.
Greenbaum thinks that though there are times when unlicensed cabs take business away from their legal counterparts, they usually aren’t much of a problem.
“It cuts in to the medallion industry, but it’s mostly in the hours where the [licensed cabs] are very very busy,” he said. “Most of these people who take the cars are not New Yorkers, and they overcharge them. During the rush hour when you can’t get a yellow cab, it’ll happen.”
But even with the justified need for the services of unlicensed cabs in a city where less than 14,000 licensed taxis are expected to provide service to the central business district of a city of 8.3 million people and two international airports, Greenbaum recommends against jumping into the pool of black car drivers currently operating every day in the city.
“They’re taking a risk,” he said. “Something like 4,000 to 5,000 cars have been impounded [for operating illegally] in the last year.”
On June 6, New York’s highest court approved Mayor Michael Bloomberg’s ‘Boro taxi’ plan, which calls for the issuance of 18,000 permits for apple green cabs at a rate of 6,000 per year. These taxis will provide for-hail service to northern manhattan and the outer boroughs, and the first of them hit the streets late last week.
As to whether Boro taxis will have an effect on medallion prices, Greenbaum said, “That’s a separate type of medallion…it’s not a medallion actually. They are ‘Boro permits,’ and they are sort of restricted as to where they can work. They’re a different color than the yellow cabs, and they’re not allowed to pick up in the central business district of Manhattan and the airports.”
Still, he wasn’t ready to make a prediction just yet as to their lasting effects on medallion price, and said, “Only time will tell. Let’s see what kind of demand there will be for them.”