"The Rent Is Too Damned High."
If it was, it's probably not anymore. Rents have dropped, and it is a great time to be a housing consumer in Manhattan. Either a buyer or a renter. I addressed the state of the sales market in this month's Q2 Report. This blog entry will update you on Manhattan’s rental market.
The New York Times had an article on July 12, 2020 entitled “New York City Rents Fall as Vacancies Rise“. Click HERE to read the entire article. The summary? Since mid June, rental listing inventory has spiked, but renters are not biting. Leasing activity is down 57% from a year ago. The lack of demand can be attributed to fewer renters needing apartments; many are either returning to live with their parents or moving in with their significant others. With people successfully working remotely, they feel no need to live close to work. At the higher end of the market, many would-be renters are summering outside The City in The Hamptons, Down the Shore, or in The Country, and are postponing housing decisions until they determine how and where their children will be schooled, or what they expect their commute will look like.
Landlords are reacting quickly to the softening market by either cutting rents or offering free month(s), allowing flexible move-in dates or lease terms, and payment of broker fees, I received a notice this morning that landlord is offering tenants two months free and one and a half months Owner Paid brokerage commission.
Another of our landlords, with a portfolio of approximately 8,000 units, regularly distributes a list of its availabilities. The list is typically between 15 and 25 pages long. On April 1, it was 17 pages. On June 1, it was 42 pages. On July 1, it was 65 pages. On July 15, it was 79 pages, and they are currently offering tenants one month free and payment of the broker fee on all of its apartments. In the last 3 months, Manhattan went from a rental inventory of just over 10,000 units to more than 19,000, and more are likely as unreported "shadow inventory".
It is impossible to know precisely how much rents have fallen because the monthly rents don't include the many other incentives being offered.
We asked one of our tenant clients whether she considered delaying her move to see whether rents would come down further. Her response: "I don't want to wait; I want to be settled in my new place well before another lockdown / shelter-in-place order is issued."
We remain committed to providing our clients with an understandable analysis of what's happening in the Manhattan marketplace. Let us know how we can help with your particular real estate needs.