They do. At some point the landlord makes the decision that this is good enough and accepts an offer using whatever factors are in play, maybe some personal circumstances like needing the money sooner rather than later or just liking one of the applicants more, but the next landlord is now informed by what his neighbors charged a month or two ago for a similar space and uses that as the floor for what they should ask for. On and on it goes and suddenly prices trend up and a space that went for $X two years ago now goes for $X+$500 today, or as we see in the original article, $X-$1K versus a year ago.