How will Coronavirus affect the market?

David Goldsmith

All Powerful Moderator
Staff member

'Droves' of people are fleeing New York City permanently to live in the suburbs or smaller cities - sparking questions of how the city will bounce back once coronavirus lockdown is lifted

  • Young families who were considering moves to the suburbs have been given the push they need, real estate experts say
  • Singletons who can now work remotely from anywhere are also eyeing less expensive cities with better weather
  • One real estate business told DailyMail.com they receive 'hundreds' of inquiries a week from people trying to leave
  • It raises questions of how the city's tax income will be affected by an exodus
  • It is unclear how and when the city will reopen and which businesses will even be able to open their doors again after weeks with no income
  • In the 20s, there was a population surge and building boom which came years after the Spanish Flu with a boom in industry and technology
  • Some hope a similar thing will happen after the pandemic, but others think it will take 'years' for New York to return to its former glory if at all
Waves of people are trying to leave New York for the suburbs and smaller cities amid growing fears that the city may never return to its former glory or that it will take years to get there.

Among those fleeing are parents with young children who had already been eyeing moves to suburbs and were give a push when the pandemic hit, and frustrated singletons who no longer see the point in paying exorbitant rent prices for small apartments when there is no city beyond their homes for them to enjoy.

It has sparked questions of whether New York will bounce back - like it did in the 1920s after the Spanish Flu, when there was a spike in creativity and population growth - but also fears that the Big Apple, beloved for its chaotic density and busyness, may never be the same again.

As of Wednesday morning, there were more than 134,000 cases of COVID-19 in New York City and more than 9.400 deaths.

Some of those leaving are young families who had been considering the suburbs of New Jersey and upstate New York when the city went into lockdown at the end of March.

Among them are Stan and Julia Usherenko who paid $25,000 over the asking price for their new home in Midland Park, New Jersey, after viewing it just once last month on the final weekend that open houses were allowed.

The couple had been living in Sheepshead Bay, Brookyln, with their two young children.

Heidi Matisoff and her husband have also bought a home in suburban New Jersey for them and their two young children.

'The lure of leaving the city has increased,' Heidi told The Wall Street Journal.
Alison Bernstein, who runs a service called Suburban Jungle which matches city clients with suburban homes, told DailyMail.com she has seen a surge in interest in suburban properties and properties in other cities.

'Our business has always been based on lifestyle. We have people who start the process, they say "let me see how it goes, I'm not quite sure", they are weighing their options of staying in the city or moving, maybe they're not quite ready though because they want to see what happens with preschool or if they have another baby.

What we've seen is, aside from new clients who need to get out for space for example if they have kids and two people working from home, the city's not meant for that, they are saying "we have to get out now."

'The existing clients who were on the fence before are also all coming back in their droves.

'They're saying "now is the time,"' she said.

Now that it's 'sinking in' it may be months before the city is back to normal if ever, she said, they are looking for more permanent options like buying homes.

While deals are yet to be finalized, she said she has received 'hundreds' of inquiries in the last week alone.

The househunters are bolstered by the knowledge that they can work from home with more ease than they previously thought.

'Typically, they would have to be within 40 minutes of the city but now they can work from home they have started pushing further out,' she said.

Many of her clients are young families.

'They specifically are having a hard time with it because when you have little kids and you have no space outside and the weather is getting nicer but it's scary to go outside or even to go in an elevator - toddlers touch everything. Those people are very much affected in terms of quality of life,' she said.

However there has also been a surge in interest among younger, childless people who are exploring other cities.
(More)
 

David Goldsmith

All Powerful Moderator
Staff member

When will NYC really get back to work? September, experts say
Restaurants “will be lucky” to re-open this year, business leader warns

As New York City prepares to slowly reopen, industry insiders say that most offices and small businesses are not close to doing so.

Kathryn Wylde, president and CEO of the Partnership for New York City, which represents more than 100 of the city’s largest private companies, said she doesn’t expect most white-collar workers to be back in their offices until September.

For restaurants, “they’ll be lucky to open by January 1, many of them,” she said.

A good portion of the city’s economy — and the real estate industry in particular — relies on millions of people pouring into Manhattan and other business districts each day. But now New York will have to persuade employees who can work remotely to come back, Wylde said.

“We’re going to have to make a sales pitch for the city that we’re safe, that they’ll be healthy, that the protections are in place,” she said during The Real Deal’s webinar series TRD Talks Live on Friday. “Employers are going to have to make a pitch [too]… It’s going to be a campaign.”

The city as a whole will be a new place, according to the other participants in the webinar — Alan Fishman, chairman of Ladder Capital Finance, and Andrew Kimball, CEO of Industry City.

Fishman, whose commercial REIT has $6 billion in assets, agreed that companies will want more space with fewer people occupying offices, but said that space might not be in New York City or even the metro area.

“I’m not sure it’s going to be a suburban flight as much as I think it’s going to be a redistribution around the country,” he said. “Think about the economic cycle of that. You’ll have fewer people and more space and the financial burden of that has got to get worked [out].”

Wylde noted that many Partnership member companies are surveying their people about whether they want to continue working from home or get back to the office. So far, the results are 50-50.

“There is a real split between employees,” she said.

For those who return, offices will look and feel different.

“There’s going to be a lot of design changes, different protocol,” Wylde explained. “They’re going to need more square footage. They’re going to need different layouts. They’re going to need different partitions.”

She noted that one firm from Houston is even encouraging its employees to become whistleblowers on workplace safety. “Now whoever thought they’d hear of that?” she observed, adding, “It’s to restore confidence among their employees that they’ll be protected when they come back.”

The pandemic has been a challenge for Industry City and its tenants, said Kimball, who has been working to redevelop the industrial and retail campus in Brooklyn. But one issue to watch is whether the crisis changes the dynamic of the Sunset Park campus’ rezoning application, which was frozen when public meetings were banned.

Kimball was trying to persuade locals that the jobs brought by the rezoning would be good for the area, but some argued they would go to outsiders and trigger gentrification. When the rezoning process resumes, unemployment will have skyrocketed and the prospect of new jobs might be seen in a new light.

“New York succeeds when it grows,” Kimball said. “You can’t be progressive without progress. And we’ve got to get back to that.”

But there are signs that the gap between the real estate industry and housing advocates and legislators is widening even further during the crisis.

Kimball called on business and labor groups to come together to support development, adding that an “aggressive” affordable housing plan would be a key part.

Fishman said he expects to see a complete change in the retail landscape.

“It will have to be very different from what we have today because you’re just not getting store after store after store opening up,” said the veteran business leader, who sits on Santander Bank’s board.

Kimball has been making the argument that the future is the “innovation economy” that Industry City is cultivating, not in the traditional heavy manufacturing and shipping industries that once bustled on the Sunset Park waterfront.

While it remains to be seen whether white-collar jobs will be moved to other cities or remain at home, Wylde warned, the notion that they must all be together has lost some currency during this work-from home period.

“That’s a real challenge because most firms I’ve talked to — in media, finance, tech — are finding that they very much have not lost their productivity,” she said.

Picking up on Kimball’s point, Wylde called for pre-pandemic fights about managing the city’s prosperity to be set aside in order to deal with the crisis at hand.

“There’s no good guys, there’s no bad guys,” said Wylde. “When we had prosperous times, we could afford these kind of political battles. We can’t now.”
 

David Goldsmith

All Powerful Moderator
Staff member

Desperate Sellers, Nervous Buyers: Real Estate Sales in a Pandemic
The sales market in New York City has slowed to a crawl, but bold buyers are forging ahead, sometimes buying sight unseen.

Late last month, about 60 agents from some of New York’s top brokerages gathered in a virtual conference room for what was billed as the first open house of its kind for real estate agents. One by one, presenters shared pictures and videos of eight listings in Chelsea, with varying degrees of candor.
“It does look onto a brick wall,” said one agent.
“We just reduced the price,” said another.
The gallery of muted agents looked on. One chewed a sandwich and yelled at someone offscreen; another sat stone-faced in front of a virtual jungle background. One wore a suit and tie, while another splayed out on a couch in sweats.
“I feel like I’m inside an acid trip,” an agent wrote in a private text.
Six weeks after New York State issued its stay-at-home order to combat the coronavirus, agents, consumers and developers are finding their way through an unrecognizable home-buying market, devising new and unfamiliar methods to push deals along against long odds. Some are proving more successful than others.
It was already going to be a challenging spring in Manhattan, where prices are down about 20 percent from the peak in 2016 amid a glut of luxury condos. But as sellers pitch million-dollar apartments over FaceTime and buyers grapple with purchasing a home they’ve never set foot in, sales and listings are evaporating during what is supposed to be the peak of spring buying season.

From March 22, when the stay-at-home order took effect, to April 29, there were 643 contracts signed in Manhattan, fewer than half signed during the same period last year, according to GS Data Services, a real estate data firm. The median sale price of $1.025 million marked a 6 percent drop from the same time last spring. In Brooklyn, where the median sale price was $900,000 from March 22 to April 29, signings were down 65 percent from the same period last year.
Now agents are bracing for deeper cuts. There were just 59 new listings posted in Manhattan in the week ending April 26, including resales and new development, a stunning 88 percent decline from the 519 listings added during the same week last year, according to UrbanDigs, a real estate data site.

“The drop in deal volume is staggering and unprecedented for the industry,” said Garrett Derderian, the chief executive of GS Data Services, adding that most of the recent buyers still had a chance to visit in person, before the lockdown.

“I don’t see deals going fully virtual,” he said, adding that sales will decline further because so much of the buying process is normally tactile and emotional.

The organizer of the virtual open house, Gerald Germany, an agent with Douglas Elliman, said his remote event was the best way for agents to gain exposure for their listings while in-person showings remain prohibited. So far, though, he has had just one signed contract since the lockdown began: a one-bedroom apartment listed for $995,000, which the buyer visited just before the restrictions began.

“We’re going to have to wait until these people can get in and see the units,” he said. In early May, Gov. Andrew M. Cuomo announced that the second phase of reopening the city would include real estate services, though the timeline is unclear.
Still, as frantic sellers hunt for buyers, deals are still happening — from first-timers hoping to take advantage of near record-low mortgage rates and soft prices, to all-cash investors buying units in bulk. To lure sheepish buyers, agents and developers are trying everything from millennial-friendly Instagram tours to deeper discounts and even “satisfaction guarantees.”

It’s unclear where prices will settle, but the first batch of new buyers could set the tone for months to come. In a small survey of 43 offers entered after the stay-at-home order in Manhattan, Queens and Brooklyn, the average offer was 14.5 percent below asking price, according to Fritz Frigan with Halstead Real Estate. Among accepted offers, the discount was about 8 percent. (Discounts are likely to be smaller at the lower end of the market, where supply remains tight, agents said.)

Kathy Murray, a Douglas Elliman agent, is still getting deals done, but from the confines of her home. If there is an upside to having to show apartments virtually, it’s that habitual open-house tourists rarely bother, leaving only determined buyers to contend with.
“Once they want a FaceTime tour, they tend to be more serious about making a deal,” said Ms. Murray, who has four deals in the works — three of which involve international buyers.

In late April she closed a deal on an Upper East Side studio listed a year ago. Before the pandemic, the price was cut twice, from $745,000 to the last asking price of $695,000, and she said the buyer, a Harvard student from Hong Kong, negotiated an additional 9 percent discount as the market grew more uncertain. Crucially, the buyer and his parents requested to include the seller’s furniture, so they wouldn’t face move-in challenges with the condo board.
Deals today require good timing and adaptability. Lara Sullivan, who rented out her Upper West Side co-op before moving to Boston for a job in the health industry, drove back to New York recently to retrieve the keys from her last tenant, not thinking she’d soon find another renter, let alone a buyer.
Her agent, Alyssa Brody with Compass, wasn’t expecting much interest when she listed the apartment for sale in late March, but she received a call from an interested broker within half an hour, she said.
With gloves and a mask in tow, Ms. Sullivan drove for three hours to open all the doors in the apartment, then waited in the car as the prospective buyer toured the space. Ms. Brody, who was two hours away in Sag Harbor, gave live updates over FaceTime, conveyed by the buyer’s agent

Alyssa Brody, a Compass agent, credited a recent sale to this selfie-style apartment tour posted to Instagram. “It has to be authentic,” she said, or buyers become suspicious of the content.Credit...Alyssa Brody
It paid off: The buyer, who caught wind of the upcoming listing three weeks before it came to market, agreed to pay close to the asking price of $1,968,300 for the three-bedroom duplex at the top of a prewar walk-up. Ms. Brody credits an amateur Instagram tour of the apartment she recorded in 2018 for catching the buyer’s eye.
“It has to be authentic,” she said of the selfie-style video, with captions like “the most magical part!” and the hashtag #mondaymotivation. Overproduced videos, she said, can make buyers question the content.
As Ms. Sullivan discovered, motivated buyers are out there. At Manhattan House, the well-regarded midcentury condo on the Upper East Side, Shelly Bleier, an agent with Douglas Elliman, sold a one-bedroom apartment, sight unseen, to another resident of the building in an off-market deal. It is in contract for $70,000 more than the $2.01 million the seller paid for it in 2016, at the peak of the market. Ms. Bleier said she would have listed the unit for about $1.65 million, based on recent comparable sales.

“I think it’s the pandemic deal of the century,” said Ms. Bleier, whose client, an investor in India, was preparing to rent rather than sell because she feared she wouldn’t be able to turn a profit.
The buyer had heard the apartment was going to list for rent, and jumped at the chance to buy it for a family member. “I told the woman, ‘I can’t show it to you,’ and she said, ‘I don’t care,’” apparently because she had seen the apartment before.

In the luxury condo market, where prices have been lagging for years, there were just 11 new development contracts signed in the week ending April 26, marking the lowest weekly tally in several years, according to the brokerage CORE. Now developers, some of whom were under pressure to move units long before the pandemic, are offering substantial concessions.
 

David Goldsmith

All Powerful Moderator
Staff member
While few expect the wave of defaults seen after 2008, there will likely be some urgent sales in the coming months, said Elliot Bogod, president of Broadway Realty. He said he was trying to purchase about 20 units at a 20 percent discount from an Upper West Side condo he would not name, because of competition from other bidders. (In an unusual move, he said he was negotiating with the lender, not the developer, suggesting the property might be in financial distress.) The units start at around $4 million, he said, and his clients plan to rent them.
At Waterline Square, a new luxury complex on the West Side, a group of South American buyers bought eight units in April for close to $27 million in cash — an average discount of about 7 percent, according to people familiar with the deal. James Linsley, the president of GID Development Group, the developer, would not comment on the buyers, who visited the property before the lockdown, but said the sales team has signed six deals since the lockdown began, none of which were sight unseen.
Despite its current role as the epicenter of a global pandemic, investors “still look at New York City as a safe haven,” said Melissa Ziweslin, a senior managing director at Corcoran Sunshine, a large development marketing firm.
At One Manhattan Square, the 815-unit tower on the Lower East Side, the developer, Extell, has announced its deepest discounts yet: up to 20 percent off select units in a building where prices ranged from $1.2 million to over $13 million. Before the pandemic, the developer was already offering to cover up to 10 years of common charges on the most expensive units, at a cost of tens of millions of dollars to the project. About 33 percent of the units are now closed or in contract, according to an analysis by the data company MarketProof. A spokeswoman said the developer would not release new sales numbers.

Less expensive condo projects have taken other unusual steps. At the Rowan in Astoria, Queens, where prices range from $540,000 to about $2.5 million, the developer, RockFarmer Properties, is offering a “satisfaction guaranteed” clause. Buyers who signed after the stay-at-home order will be able to tour the under-construction project when the lockdown is eased, after which they will have five days to walk away from any deal. Down payment requirements were also reduced to 5 percent from 10 percent.
Shan Chowdhury, of Halstead, signed a contract for a client, a first-time buyer in Miami who works in the medical field, to purchase a one-bedroom apartment, sight unseen, at the Vernon 123 complex in Long Island City, Queens.
The buyer watched a virtual tour and looked at an aerial view from Google Street View, Mr. Chowdhury said. That was enough to seal the deal. The 650-square-foot apartment initially listed for $895,000 in 2019, and was cut several times to the last asking price of $799,000.
Mr. Chowdhury wouldn’t reveal the final price, because the deal hadn’t closed yet, but could confidently say: “We renegotiated, hard.”
 

David Goldsmith

All Powerful Moderator
Staff member

Rental activity hits record lows in Manhattan and Queens
“Incredibly distorted” rental market as prices rise and deals nosedive

New York’s pause order was mirrored in New York City’s rental market last month.

The number of New Yorkers signing new leases plummeted in April by a stunning 71 percent in Manhattan, 67 percent in Brooklyn and 65 percent in Queens from a year ago, according to Douglas Elliman’s monthly rental report.

The report, authored by appraiser Jonathan Miller, covers Manhattan, Brooklyn and northwest Queens neighborhoods Long Island City, Astoria, Sunnyside and Woodside.

The low number of new leases indicates high renewal activity, which cannot be tracked in the report, Miller explained.

The low supply of available rentals pushed their average prices higher because open units tended to be in more expensive buildings. Low-end units were less likely to hit the market than usual, presumably because landlords and tenants did not want to cope with filling and finding new apartments during the pandemic.

“We have this incredibly distorted market,” said Miller. “What you’re seeing now is fewer properties and they’re skewed to the higher end.”

Even as the supply of available apartments fell, landlords agreed to steeper discounts than usual, an indication of plunging demand. Meanwhile, rental markets surged in summer and weekend towns outside of the city, such as the Hamptons and Jersey Shore.

According to Miller, new leases typically represent about a third of the city’s rental market. Renewals make up the rest.

Rents also grew in March, which Miller postulated at the time might have been caused by a lag in the data. Shutdown orders had begun mid-month.

Looking at the April data, he emphasized that “what we’re seeing publicly is not representative of a normal market.” The true story of New York City’s rental market “is being dealt with on the renewal side in private,” he said.

In Manhattan, new leases signed in April dropped 71 percent from a year ago to 1,407, the lowest number recorded since April 2009.

The median Manhattan rental price last month was $3,650, a 4.9 percent increase year-over-year. Listing inventory fell 14 percent to 4,714 units available. Listing discounts — the amount by which asking rent is lowered from its original price — rose to 1.8 percent from 1.2 percent a year earlier.

Manhattan’s vacancy rate also increased to 2.4 percent from about 2 percent in April 2019, a sign that despite fewer listings, renters aren’t falling over themselves to secure a new apartment in the city.

In Brooklyn, new leases fell 67 percent to 439 — the largest drop since Miller began tracking the market in January 2009. The median rental price was $3,197, up 16 percent year-over-year, while listing inventory slid 28 percent from last year, to 1,357 apartments.

Listing discounts in the borough saw a sharp uptick to 1.8 percent from 0.7 percent in 2019.

In northwest Queens, the number of new leases signed declined 65 percent to 100. It was the biggest drop since at least December 2012, when Miller began tracking that market. He noted that the number of leases in new development buildings was the lowest in four and a half years.

The median rental price in Queens was $2,812, a 3 percent increase year-over-year. The number of for-rent apartments fell 29 percent to a total of 336 and listing discounts rose to 1.2 percent from 0.5 percent the prior year.
 

David Goldsmith

All Powerful Moderator
Staff member
As rental inventory spikes, who is going to fill it? The Summer is usually the busy season (Hank Sopher used to deride any rental agent who wanted to take a vacation in July or August as a waste if a desk). But that has a lot to do with graduates coming to New York City needing places to move into. I think it is highly doubtful there will be anywhere near the usual amount of those. As well as what appear to be an awful lot of potential lessees moving away from NYC.
Flood of New Rental Inventory Hits the Market as Rents Fall
The spread of coronavirus through New York City and the ensuing lockdown measures have shaken the city rental market in a way that has not been seen since the Great Recession, with New Yorkers fleeing the five boroughs to avoid the virus or save money after losing their jobs.

Leasing and new rental inventory hit record lows in late March and April after Gov. Andrew Cuomo imposed stay-at-home measures on New York State, which prohibited real estate brokers from showing apartments in person. Listing website and data aggregator StreetEasy released data Tuesday showing that new rental inventory has risen from 1,750 listings during the last week of March to nearly 5,000 listings the week ending May 10.
Median rents in Brooklyn and Queens hit record highs in February just before the pandemic struck, reaching $2,755 and $2,215 respectively, according to StreetEasy’s monthly market report for February.

StreetEasy economist Nancy Wu cautiously predicted that the new listings might mean the rental market was rebounding. However, she pointed out that with fewer interns and new college grads coming to the city this summer, the typically hot summer rental market may be sluggish. The potential slowdown would coincide with higher vacancies as New Yorkers flee the coronavirus pandemic. And the city could see an economic slowdown that would rival the 1970s, losing up to 475,000 jobs in the 12 months, according to the New York City Independent Budget Office.
Meanwhile, asking rents on new listings have been declining since lockdown began in the city. Of rental listings that were on the market when the governor issued the PAUSE order and are still available, 70 percent of them have slashed their prices, according to listings site Localize.city. Brooklyn saw the biggest drop in average asking rents—about 3 percent—between late March and now, according to Localize data analyst Nitzan Alkobi.
Within Brooklyn, Crown Heights and Prospect Heights both saw 5 percent drops in listing rents, which were the largest in the borough. Average asking rents in Crown Heights were about $3,137 before quarantine and declined to $2,996 by last week. Prospect Heights experienced a decline from $3,733 in late March to $3,564 as of last week. Average asking rents in Manhattan declined 2 percent over the course of quarantine, while Queens saw only a 0.7 percent drop.
The higher end of the rental market might be more stable because wealthier people are less likely to lose their jobs right now, said Localize CEO Steven Kalifowitz. The middle segment of the market was similar, he said, but it might see some churn as people lose their jobs and move to cheaper apartments. The lower end of the rental market could “get hollowed out” as low-wage workers struggle to pay their rent amid staggering job losses, he speculated.
Jonathan Miller, who runs real estate appraisal firm Miller Samuel, agreed. “The low end of each segment of the market has been more challenged in this market,” he said. “Therefore there’s a higher probability that there’s negotiating on existing leases, whether it’s a deferral or a short-term discount off of existing rent. And that information is not in the public domain at all.”
His April market report, which incorporates data from Douglas Elliman and the Real Estate Board of New York’s Multiple Listing Service, found that discounts on Brooklyn listings in April had increased 1.1 percent compared to April last year. Manhattan listings saw a 0.6 percent increase in discounts compared to the same time last year.
The number of new leases signed in April also cratered, reaching the lowest level since the Great Recession. Leasing declined 71 percent year-over-year in April for Manhattan, from 4,831 leases signed in April 2019 to 1,407 in April 2020. Brooklyn experienced a 69 percent year-over-year drop in new leases—to 439 from 1,323 last April—along with a 28 percent slide in new rental inventory.

“We had a pullback in listings,” said Miller. “And as the stay at home restrictions are lifted, there’s going to be a large amount of new inventory and that is going to soften rents. It’s already occurring. It’s all pegged to how quickly the economy rebounds.”
He noted that the dramatic decline in leasing had distorted his data somewhat, because the leases signed represented a much smaller fraction of the market than normal. It reflected the fact that many tenants were simply staying in place and renegotiating their leases rather than finding a new place.
“The landlord and tenant are stuck together because of shelter in place, and if the tenant leaves, there’s no sure thing that the landlord will be able to find a new tenant,” he said. “This is not a virtual rental world.”
 

David Goldsmith

All Powerful Moderator
Staff member
I can't even use my usual Peter Cooper Village/Stuyvesant Town metric to judge any longer:
Last June after the Housing Stability and Tenant Protection Act of 2019 passed the number of available listings quickly fell from well over 200 to just over 100 (side note: At first they claimed they were just going to warehouse vacated below market units, but after public backlash changed their tune and said they wouldn't. But the number of listings didn't change and one such unit directly above mine has been vacant for close to a year so I think they are probably lying to get the public off their backs and banking on the law being changed one way or another). In March, the number of available units was back over 200. A week ago the number was 480. A day later they removed the counter (reminds me over REBNY forcing listing systems to suspend "Days on Market") and only 236 listings appear on the website. They also instituted the 2nd substantial price increase in a few weeks. Now personally I don't believe they rented 244 units overnight and think they are simply manipulating the data. I would guess they are showing 50% of the available units (if I'm correct that would mean today's 284 units on the website represents availability of 568).

It's really too bad (for me) because that used to be a valuable resource in evaluating the rental market. But I do think it shows the denial of market conditions and thinking the market can be easily manipulated.

Manhattan rental vacancy is highest in 14 years
New leasing activity remains down in Manhattan, Brooklyn and Queens

It has been a while since it was this hard for landlords to fill an apartment in New York City.
Manhattan’s vacancy rate hit a new high in the 14-year history of a monthly rental report as new leasing activity in the borough was down 62 percent last month from a year ago. It was also 54 percent lower in Brooklyn and 61 percent lower in Queens.
Though large, the year-over-year declines were not as bad as in April, which Jonathan Miller, author of the Douglas Elliman report, attributes to parties beginning to adjust to the new normal of the pandemic.
“I think we’re moving from the stunned-and-paralyzed mode to the thinking-about-the-future mode,” he said.

More Manhattan apartments were left unrented last month than in any month since Miller began tracking the market in August 2006. The vacancy rate of 2.88 percent was up from 1.65 percent during the same period in 2019. It was 2.42 percent in April.
Miller, an appraiser, said, “As people lose their jobs or move out of the city to suburbs, it’s harder to fill that apartment,” he said.
Despite rising vacancy, rents stayed flat in Manhattan. The median rental price in Manhattan was $3,415 in May, virtually unchanged from $3,413 a year earlier. In Brooklyn, rents last month were 3.3 percent higher than a year ago — $2,921, up from $2,829.
But landlords threw in more sweeteners last month in Manhattan. In 42 percent of Manhattan deals, owners made rental concessions or footed the bill on broker fees, up from 34 percent a year ago. The value of concessions was equivalent to 1.5 months of free rent, up from 1.2 in 2019.
In Brooklyn, the share of discounted deals rose to 33 percent up 40 basis points from 32.6 percent in May 2019. The size of concession grew to 1.4 months of free rent from 1.3. Though gains were small for renters, it was the first time in 17 months that the number of Brooklyn landlords offering incentives increased.
Queens bucked the trend with median rental prices dropping 5.6 percent to $2,745 from $2,908 a year ago, though the number of landlords that offered incentives ballooned to 65 percent from 33 percent. The value of the concession offered rose to the equivalent 1.8 months of free rent from 1.6 months.
Miller said it was “too soon” to see large drops in rent but noted that May rents were lower than in April in all three boroughs, indicating “a step back.” With new leasing volume down, most price cuts or rent deferments in May occurred as part of renewals or in negotiations between landlords and tenants, he explained. (Renewal data is not tracked in Miller’s report.)
“The action, so to speak, is happening on the private side,” said Miller, noting a sense in the market of landlords and tenants “being stuck in the same boat, or stuck in the same apartment.” He attributed the fall in leasing activity partly to agents being unable to show apartments and partly to the sudden onset of the pandemic.
“We’re largely in a holding pattern, but that’s coming to an end pretty quickly,” said Miller.
Agents will be able to begin showing apartments in New York City as part of phase two of reopening. The earliest that could be is June 22, though Mayor Bill de Blasio has said he doesn’t anticipate it until July.
 

David Goldsmith

All Powerful Moderator
Staff member
Peter Cooper Village/Stuyvesant Town has their second miracle this month:
1) After rising to a staggering 480 units available on the website (last year at this time a bit over 100) on June 3rd, the next day they removed the counter and (by manual count) the count dropped to 236.
2) After the count had fairly steadily crept back up to 303 yesterday, June 15, today it dropped to 116.

Since it seems they have been leasing between zero and a handful each day for the last 3 months, what are the chances they actually rented 244 one day and 189 a couple of weeks later sans some announcement of some major institutional deal (which almost assuredly would have been crowded about in a press release and seen in The Real Deal)?
 

cjchappas

New member
Random but I saw that Australia is considering shutting down their real estate market to prevent prices from falling. Can you imagine? They said the worst case scenario they envision is a 30% drop. The horror!
 

John Walkup

Talking Manhattan on UrbanDigs.com
First post-covid deals starting to close now and median price looks to be down 10-15% from Feb/Mar rolling average. Some big spikes in listing discounts as sellers who had to sell hit some low bids. Super small sample size on the closings, but indicative of market repricing. As more sales come in, I think we'll see the median price slowly increase, but most likely in the down 10% range.
 

David Goldsmith

All Powerful Moderator
Staff member
I think it will depend on how big the avalanche of new listings is after showings begin again. If all 5,000+ sales listings which historically would have come on the market during this past 3 month period show up in short order it could overwhelm demand.

Same in rentals - landlords have been holding back a lot of units anticipation a big influx once showings begin plus the typically hot Summer season. But if enough people have left NYC for the short/medium term, plus I think the new hires out of University market will be great diminished, they may be sorely disappointed.
 

John Walkup

Talking Manhattan on UrbanDigs.com
Listings are starting to ramp up, true. No telling where they will top out at. Contracts lag listings so we won’t get a good read on demand for a couple weeks at least. Of course that’s assuming buyers are in the city shopping for apts vs remaining in the Hamptons until September.

Moreover - next week, when the quarterly reports come out, they are going to be fugly. On a quarterly basis the pandemic crushed the market, on a yearly basis, last year’s mansion tax bump is going to make it look like 1929 with 25/30% drops in median prices for some segments.

How would a seller price with that info? What’s your average buyer to think about the market? Brokers - buckle up!
 

David Goldsmith

All Powerful Moderator
Staff member
Peter Cooper Village/Stuyvesant Town has their second miracle this month:
1) After rising to a staggering 480 units available on the website (last year at this time a bit over 100) on June 3rd, the next day they removed the counter and (by manual count) the count dropped to 236.
2) After the count had fairly steadily crept back up to 303 yesterday, June 15, today it dropped to 116.

Since it seems they have been leasing between zero and a handful each day for the last 3 months, what are the chances they actually rented 244 one day and 189 a couple of weeks later sans some announcement of some major institutional deal (which almost assuredly would have been crowded about in a press release and seen in The Real Deal)?
Stuy Town Vacancies Surge as Residents Flee New York

“Everybody freaked out,” said Carole Husiak, who's lived in Stuyvesant Town-Peter Cooper Village for 28 years. For the first time, she isn’t paying her rent. “My income screeched to a halt," Husiak added.
What You Need To Know

  • Stuytown residents say the vast majority of departing tenants left NYC entirely because of the pandemic.
  • Average rental prices fell eight percent from April to May in Manhattan, five percent in Brooklyn and two percent in Queens, according to Miller Samuel Inc.
  • Management company Stuyvesant Town-Peter Cooper Village Apartments, which is owned by Blackstone, allowed tenants suffering from pandemic-related economic hardships to cancel leases without incurring penalties.

"We were unable to keep up with all my expenses. My business closed for three months and my income closed for three months,” she told NY1.
Husiak took up the owner’s coronavirus crises offer to pay one month’s rent with her security deposit and defer another month’s payment into the future.
"That made it much more reasonable and took my stress level way down,” said Husiak.
Beam Living — the management company for the city’s largest rental complex, which is owned by Blackstone — also allowed tenants suffering economic hardship because of the pandemic to cancel their leases without penalties.
“There’s been a bit of an exodus,” said Susan Steinberg, the President of the Stuyvesant Town-Peter Cooper Village Tenants Association.
Many took management up on the offer and moved.
“The moving vans everywhere, all day long… people are running away,” said one resident. “They don’t want to stay, they are afraid [of] the health problems … and the rent is high. People lost their jobs. They can’t pay that rent.”
“Just a lot of furniture moving all around and a lot of furniture being thrown out,” said another.
The tenants association said in March the management company had roughly 150 vacancies listed and now there are more than double that, plus another 150 that aren’t even listed yet.
“I would say there’s a minimum of 500 vacant apartments,” said Steinberg.
“The outbound migration pattern is clearly citywide,” said real estate appraiser Jonathan Miller of Miller Samuel Inc.
Miller has tracked the Manhattan vacancy rate for fourteen years and says it’s nearly doubled to 2.88%, the highest he’s ever seen here.
“It’s high and will likely get a little bit higher before it returns to more normal levels,” he said.
Miller predicts more people will leave the city this summer, but adds the high vacancy rate is also a result of landlords being unable to fill apartments because of the coronavirus freeze on in-person showings and buildings preventing moves.
All of this — landlords and realtors being unable to lease and show apartments until late June, the elevated vacancy rate and therefore high inventory of apartments — has led to lower rents.
According to Miller, average rental prices fell eight percent from April to May in Manhattan, five percent in Brooklyn and two percent Queens.
 

David Goldsmith

All Powerful Moderator
Staff member
New York Rents Fall as Vacancies Rise
Thousands of New York renters left the city because of the coronavirus, and rents have finally started to go down.

The coronavirus lockdown has hit New York City’s rental market hard, driving Manhattan vacancy rates to their highest level in 14 years and pushing the number of June new lease signings to the lowest level seen in nearly a decade, according to a new report from the brokerage Douglas Elliman.

In late June, after roughly three months of coronavirus lockdown and after thousands of New York renters left the city to shelter elsewhere, real estate brokers started showing apartments to prospective renters again, a shift that many landlords were optimistic would revive the spring’s sluggish rental market.

But the latest numbers show that vacancy rates are now at 3.67 percent compared to 1.61 percent in June 2019.

Manhattan median rental prices, meanwhile, dipped 4.8 percent compared to June of last year, to $3,378 a month, wiping out the increases of the last few years. Concessions were up, too, both in the percentage of listings offering them and the amount of the concession.

“The shutdown basically froze pricing at March/April levels,” said Jonathan Miller, a New York appraiser and the author of the report. “When a market is shut down for safety concerns, there is very little transparency. The reopening the last eight days of June were too short to really have an impact on monthly results, but more weakness in the market will be revealed when transparency increases.”

The reopening allowed in-person property showings and persuaded many landlords to list properties last month, hopeful that pent-up demand would drive lease signings. In Manhattan, listing inventory jumped 84.7 percent compared to June of 2019, with 10,789 rental properties hitting the market. But renters aren’t biting, at least not yet: just 3,171 new leases were signed, down 35.6 percent compared to 2019.


Gary Malin, chief operating officer of the Corcoran Group, pointed out that there would naturally be some lag time between a listings surge and new lease signings, especially because the reopening happened right before the Fourth of July. But, he added, there was no denying that the coronavirus had been a “shock to the system.”

“The June rental data should not come as a surprise to anyone,” said Mr. Malin. “For the last three months we could only do virtual showings.” There is also uncertainty because start dates for many new jobs have shifted while others have been told they can continue to work from home at least until Labor Day. “The market has to reset itself.”

Still, given the imbalance in the market, that reset will almost certainly accelerate what have, to many renters’ disappointment, so far been very minor price adjustments and concessions.

John Walkup of UrbanDigs, a real estate data firm, said nearly 1,500 new Manhattan listings came on the market the week of the reopening, about 500 more than you’d see in a normal June. “And while we’ve seen a slow but steady increase in leases signed, it’s low compared to last year, so the question is ‘What will happen with that excess inventory?’ ”

“Everything is supply and demand,” said Mr. Malin. “And there’s a lot of supply but much less demand. Now that everyone is beginning to see what is out there, owners will modify their prices. But most landlords are not going to make a quick decision to do a big price cut. They’ll see what the numbers are, what the traffic is like, what the offers are.”

In Queens, median rental prices in June were down 5.7 percent year over year, to $2,700 a month, according to Douglas Elliman. Brooklyn rental prices were essentially flat, but there were more and deeper concessions in each borough and they showed the same imbalance as Manhattan, with huge increases in new listings and annual declines in new leases.

While lease signings are expected to pick up in July, that may not extend to all segments of the market. Larger, luxury apartments, for example, saw some of the biggest price drops over the last few months, a phenomenon Mr. Miller attributed to the high-end market being more mobile. And wealthy New Yorkers who left the city when the pandemic hit and are comfortably ensconced in country homes for the summer are unlikely to rush back to sign new leases before fall.

It’s too soon to know how many of those who left the city will relocate permanently, but the ongoing uncertainty of the coronavirus situation — especially the announcement on Wednesday that the city’s public schools would open only part-time in the fall — may mean that other renters will delay their apartment hunts as well, especially if they have the flexibility to do so and don’t find the current rental prices compelling.

“It’s certainly not a strong or normal market by any stretch of the imagination. Prices are falling, concessions are rising, the amount of concessions are rising,” said Mr. Miller. “Everything is weakening. In many ways, I think the rental market could be hit way bigger than the sales market.”
 
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