Is the rental market going to crash?

David Goldsmith

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Single data point example:
Built 2017. Originally rented @$9,800. Now asking $6,999.

David Goldsmith

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Unemployment Stats Reveal Why NYC Rents Could Fall Much Further

Rental prices typically fall significantly and for an extended period of time in response to economic downturns, and the current weakness in the NYC rentals market likely signals more declines to come. As of July, rents in Manhattan have declined by 3.1%, marking the largest year-over-year drop since the Great Recession, when rents in Manhattan fell nearly 10% over the course of a year.
We would not be surprised to see NYC rents fall by at least this much, if not more, by March 2021, one year into the pandemic. The economic impact of the pandemic is already worse than what New Yorkers faced in 2008-09. For one, New York City’s unemployment rate reached 20.4% in June 2020, already twice as high as the Great Recession’s peak unemployment rate of 10.4% in December 2009.
High unemployment leads to higher vacancy rates, as the New Yorkers who can no longer afford to live in the city or who moved to the city for work increasingly move away. Higher vacancy rates translate into lower demand for the rental inventory piling onto the market as leases expire throughout the summer. As demand continues to decrease while supply increases — and there are many reasons to believe these trends will continue — rents are likely to fall more than they did during the Great Recession.
Growing Job Losses and Vacancies Signal a Weaker Rentals Market Ahead
The NYC unemployment rate is increasing, and higher unemployment ultimately means less demand for rentals. According to the Bureau of Labor Statistics, New York City’s unemployment rate rose from 18.3% in May to 20.4% in June 2020. High unemployment is a trend with no quick recovery. The Partnership for New York City found that as many as 520,000 jobs have already been lost from the small business sector alone. Though some of these jobs may come back as businesses reopen, more than a third of the city’s 230,000 small businesses may never reopen, resulting in permanent job losses with no replacement in sight.

New Yorkers cannot pay rent if they do not have jobs, and many have already begun to move as their leases turn over. And because more leases expire in the summer than in any other season, vacant rentals have begun to saturate the market. Rental inventory in July 2020 increased by 65% in Manhattan compared to last year, and by 52% citywide. Many more rentals are set to pile onto the market throughout the summer, as August is typically the month with the second-highest volume of rentals coming onto the market, after July.
As leases expire, a significant group of New Yorkers are leaving permanently as part of the natural attrition of the city: they were planning to move to the suburbs in a few years anyway, and the pandemic has simply expedited their departure.

Moreover, those leaving the city are not being replaced by others moving in. The new hires who typically move to the city are starting their jobs remotely. Fewer students will return to the city in September, when colleges in the city, such as Columbia and CUNY, begin the school year teaching most courses remotely.
Where Will NYC Rents Go From Here?
We’re still in the early stages of seeing the full effect of COVID-19 on NYC rents. Not only are rents in Manhattan currently on track to fall by more than they did during the Great Recession, but rents are also likely to fall more widely across the city. According to a report by the Center for an Urban Future, the coronavirus pandemic may cause deeper losses in the outer boroughs than in previous recessions, because the outer boroughs have the highest concentration of vulnerable industries.

New York’s rentals market will not return to normal for the foreseeable future, and those considering moving or who have expiring leases will need to make decisions they did not anticipate a year ago. For the lucky few who have jobs, there are going to be deals like never before. Manhattan neighborhoods that were off limits to those on more modest budgets may once again become accessible.

David Goldsmith

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Manhattan's ultra-luxury rental market has cratered
James Tarmy and Chris Rovzar

New York | Manhattan's super-high-end rental market, comprising apartments that start at $US22,000 ($30,350) for a month's rent, has slowed to a trickle as wealthy foreign and domestic renters refuse to return to New York.
"If someone has $US22,000 a month to spend on rent, they're probably wealthy, and probably renting temporarily," says Nancy Wu, an economist at StreetEasy. "Far fewer of those people are coming to the city, so it makes sense there's less demand."

Most of Manhattan's rental apartments are in rental buildings. A much smaller percentage, including condominiums purchased on Billionaire's Row as investment apartments, are rented out by owners with no intention of living in them. It is this class of rental, analysts say, that has seen both its supply and demand plummet since the city's shutdown in late March.
Just 44 of these top-tier condos and co-ops were listed for rent since the shutdown. That's a 75 per cent decline from last year during the same time period, when 179 apartments came onto the market, according to data provided by StreetEasy.
Of those 44 apartments, only 12 have been leased, meaning that however low supply might be, demand is even lower. "Overall, there's less demand in this sector of homes this year relative to last year, even though we expected more to come onto the market," says Wu. That expectation was based in large part, Wu says, by the rest of the market, where listing numbers have surged as renters fail to renew their leases.

"July is usually the biggest month for rentals in the city," says John Walkup, the chief operating officer and co-founder of UrbanDigs. "The busy season started as it normally does, with a huge influx of supply, but the amount of leases signed was coming in at roughly a solid third lower than the previous year's amount."
Today, Walkup says, "we now have 50 per cent or more supply on the market than usual".
In July alone, there were 6698 new rental listings in total, an increase of 38 per cent compared with July 2019, according to UrbanDigs data. At the same time, the number of leases signed plummeted to 3101 last month, a decrease of 34 per cent from the previous year.
But at the high end, total inventory has contracted along with new listings. Last year there were 295 such condos and co-ops for rent on the market; this year there are just 130.
The difference between the very top of the market and the rest, Wu says, is "these are rentals in condos and co-ops, so they don't behave the same as the overall rental market where someone lives in the apartment, their lease expires, and the apartment comes back on the market". This high-end tier "can stay empty," she says, because units are often owned by individual owners with deep pockets, rather than landlords with quotas to fill.
Waiting It Out
That, brokers say, is the core issue: Rich renters aren't in the city, and rich apartment owners normally interested in cashing in on their empty apartments are willing to wait for the market to pick up.

"Normally, some of these people, if they're renting, would have started looking in June or early July for a September rental so they could be in place for when their kids come back to go to school," says Bill Kowalczuk, a broker at Warburg Realty.

Most of his clients who rent an apartment for $US30,000 a month rather than buy a $US6 million apartment, he says, "are in finance. They can make their millions grow faster in the market than if the money is sitting in real estate".
Now some of these clients are waiting "until their private school tells them what the rules are going to be. If they're going to continue online education, they're going to stay put [in the country]", he says.
Clients without school-age children are also waiting. "It's not like you can go out to go shopping, or go to the theatre," he says. "You can't do anything, so why bother coming back?"
The owners of top tier rentals, Kowalczuk continues, have no interest in letting their listings languish on the market. "The longer it sits," he says, "the less likely you are to get an offer close to asking price." A few clients have removed their listings; others are waiting until people return to Manhattan for work or school.
Lower Prices
The apartments that have listed are often dramatically lower in price than last year. Seven of this year's top 10 rentals are below $US50,000 a month; none of last year's 10 was below $US65,000, according to StreetEasy data.

In 2019, the top 10 rental apartments during the time period from March 22 to today ranged from $US256,000 a month, for a 6000-square-foot, 56th-floor furnished penthouse at 56 Leonard Street, to $US65,000 a month for a furnished penthouse at 45 East 66th street advertised as a "private modernist oasis".
This year's top listing is listed at a comparatively modest $US125,000 a month for a furnished, 7241-square-foot penthouse at the Puck Building in SoHo, which has an additional 5158 square feet of outdoor space. The cheapest of the top 10, according to StreetEasy, is a penthouse at 400 Park Avenue South in the NoMad neighbourhood that's listed at $US39,500.

David Goldsmith

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Manhattan vacancy hits new peak; Brooklyn stable
Increasingly desperate landlords give concessions on nearly half of rentals

As leasing activity resumed in the city and inventories swelled, the vacancy rate in Manhattan’s rental market hit an all-time high in July of 4.33 percent.
It was the third straight month of record vacancy, according to Douglas Elliman and Miller Samuel’s monthly rental report, which has been tracking the market for 14 years.

“With the lifting of some of the ‘shelter-in-place’ restrictions, new leasing activity surged month-over-month but still fell well short of year-ago levels,” the report said.

The number of new leases signed in Manhattan increased by 56 percent from June, but was down 23 percent from last year.
“Forty percent of Manhattanites left the city in March and April, and without clarity on topics like school reopenings, there has not been urgency to return,” said Jonathan Miller, author of the report.

About 420,000 New Yorkers left town after the pandemic hit in March, prompting speculation that the vacancy rate would exceed 5 percent, triggering an end to rent regulation. But the next housing survey on which that threshold must be met is in 2022.

As demand stayed low in July and the number of available units grew, the median rent fell to $3,167, down 7 percent from a year earlier — the largest dip in nearly nine years.
Luxury and upper-tier rentals retained their value better than mid- and entry-tier units, compared to 2019 levels. The former groups, defined as the top 40 percent of the market by price, fell 4.8 percent to $7,995 and 3 percent to $4,559, respectively.

Mid-tier rents fell by 7.4 percent to $3,150, and entry-level rents fell 5 percent to $2,295, year-over-year.
In Brooklyn, new leases increased by a quarter from last month, but were down the same amount year-over-year. The median rent was $3,000, as it was a year ago.

“If you put Manhattan and Brooklyn side by side, the outbound migration narrative is more about Manhattan,” Miller said. “Brooklyn rents are nominally down, activity is down, but it’s not the same scale as Manhattan.”
The median rent for luxury properties in Brooklyn, making up the top 10 percent of the market by price, was up slightly from last year, while in Queens it cratered, falling almost 13 percent.

The median rent in Queens was $2,424 in July, nearly 15 percent lower than it was at the same time last year.
The discrepancy in stability of prices between Brooklyn and Queens was similar for new developments. It increased slightly in Brooklyn to $3,479 but fell dramatically in Queens to $2,950, a decline of 12 percent from just a month ago and 9 percent from July of last year.

Landlords were increasingly willing to sweeten the deal for renters, especially in Manhattan, where nearly half of all new leases involved concessions, compared with about 30 percent a year ago. The size of concessions in Manhattan increased to 1.7 months’ rent from 1.1 last year.

Concessions in Brooklyn were stable at 1.4 months from a year ago, while up slightly in Queens from 1.2 last year to 1.4 this year.

David Goldsmith

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BTW I think these reports are probably substantially undercounting the number of vacancies because I think we all know of buildings with tons of vacant units but only a few officially listed for rent.

David Goldsmith

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AFAIK all the sources below are taking their source of information from listings. I think we are all aware of numerous buildings which are only officially listing a fraction of actual available units. As such it seems to me that everyone is undercounting the real number. Manhattan Vacancy Rate Climbs, and Rents Drop 10%
There were more than 67,300 units available in July across the city as it tries to rebound from the coronavirus outbreak.

The number of apartments for rent in New York City has soared to the highest rate in more than a decade, a sign that a notable number of residents have left the city because of the outbreak, at least temporarily, potentially creating a new obstacle to reviving the local economy.
There were more than 67,300 units available in July across the city, according to StreetEasy, the most apartments available in any month since the listing site started tracking rental inventory in 2010.
In June and July combined, more than 120,000 apartments were for lease, a nearly 26 percent increase over the same months in 2019.
The surge in supply has driven down rental costs across the city and forced landlords to offer generous concessions, including up to three months’ free rent and paying the expensive fees brokers command.

The spike in available units has been most stark in Manhattan, where office towers are mostly empty, residents with second homes have largely not returned, and many retail stores are closed or have gone out of business.
The median rental price there in July was $3,167, a 10 percent drop from July 2019, though New York still has some of the highest rental rates in the world.

The vacancy rate in Manhattan climbed to 4.3 percent in July, the highest percentage in at least 14 years and surpassing past records set in June and May, according to Jonathan J. Miller, the president of Miller Samuel Real Estate Appraisers & Consultants.
“The pain to the New York City economy is profound,” Mr. Miller said. “Record vacancy over the past 14 years, coupled with both a rising market share and amount of concessions provided by landlords, all tell the same story that outbound migration from Manhattan is real.”

People have, of course, migrated in and out of New York City for years; the city has attracted eager young professionals while leading families looking for space to decamp to the suburbs. It has rebounded from past challenges, including after the Sept. 11, 2001, terrorist attacks and the Great Recession in 2008.
Lower Manhattan was mostly abandoned after the attacks, but has been reborn with new office and apartment towers, and has more residents than before.
But this time there is a specter of uncertainty that is unlike anything in recent memory, analysts said. The city’s latest unemployment rate, which was released in June, was over 20 percent, double the highest rate during the Great Recession and approaching levels not seen since the Great Depression.
And even as New York has contained the virus and bucked forecasts that cases would increase as it reopened, there are fears of a second wave as colder temperatures arrive and people spend more time indoors.

“This will go on in the rental market as long as Covid lasts,” said Nancy Wu, an economist at StreetEasy, noting that the market has also been hurt by some colleges not offering in-person classes in the fall. “The biggest impacts on the economy are yet to come.”
More than any large American city, New York is made up of millions of renters, many of whom live paycheck to paycheck and pay a significant portion of their monthly income for an apartment. Because of that, fluctuations in the city’s rental market can reveal a lot about the city’s economy.
Since the pandemic struck in early March, millions of New Yorkers have lost their jobs and have been unable to pay rent. Those who could pay some rent dipped into savings and depended on the $600 weekly federal stimulus, which greatly exceeded New York State’s unemployment benefits but expired at the end of July.
Landlords have said they are struggling to pay their own bills, too, and can only survive so long without reliable rental income.

Still, while many companies of all sizes have extended work-from-home arrangements, tech giants, including Facebook and Amazon, have bet big on the city’s future.
Amazon announced on Tuesday that it would create 2,000 jobs in Manhattan for employees who will work out of the Lord & Taylor Building on Fifth Avenue, which it acquired for about $1 billion in March.
But the pandemic has triggered a large outward flow.
Starting in March and picking up steam in June, when restrictions were gradually lifted in New York, moving companies have reported unprecedented business. They are relocating people not only within the city, as rental and sales prices have decreased, but are also packing up for people returning to their childhood homes.
“There are people this year I remember from moving last year that are coming back to us and saying, ‘I’m moving out of the city this time,’” said Zach Horn, head of sales at Metropolis Moving in Brooklyn. “We had moved them three or four times in the city, and this year they are heading home.”
Mr. Miller said apartments will most likely continue to flood the market as people who are struggling financially do not renew their leases.
“Looming evictions and landlord mortgage defaults are going to be significant,” Mr. Miller said.
This month, the state’s chief administrative judge, Lawrence K. Marks, said evictions could restart on Oct. 1 after being on hold since the start of the pandemic.
The market report by Mr. Miller, created with the firm Douglas Elliman, found that rental inventory was at least at an 11-year high in Brooklyn and the highest in Northwest Queens in at least six years. The median rental price in that part of Queens, which includes Long Island City, has dropped to $2,424 a month, down nearly 15 percent from July 2019.
Eric Benaim, the chief executive of Modern Spaces, which employs about 100 brokers who focus on Brooklyn and Queens, said that demand had remained relatively high in those areas among people relocating from Manhattan.

“They want access to Manhattan but don’t want to be in Manhattan,” Mr. Benaim said.
He said that the high rental inventory also reflects the fact that landlords held on to their units in April and May, when brokers could not show listings in person, and then released them onto the market in late June.
“I was worried in April, when I was locked in my home,” he said. “As soon as we opened up, we started getting really busy, and we are doing a lot better than we thought.”
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Noah Rosenblatt

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hmm I doubt it. Im sure they will be going after those non listings & non status updates first...where rebny agents list on SE but not on RLS. Depth of data has to be up there in importance with Integrity right behind it.

David Goldsmith

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Noah Rosenblatt

Talking Manhattan on
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need to see July + Aug #s on this and where the trend is going. Looks like stimulus plan may come in lighter than expected or in parts. Not sure markets will like that

David Goldsmith

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Wall Street calls BS on apartment landlords’ rosy projections
Some multifamily owners have pegged occupancy rates at 90%, but a key index that tracks publicly traded landlords has fallen over 20%

Many apartment landlords across the U.S. maintain that tenants are paying rent, that occupancy remains high and all is going well.

Understandably, investors are skeptical, according to the Wall Street Journal. The FTSE Nareit Equity Apartments index, which follows publicly traded apartment owners, has fallen by more than 21 percent this year.

Some multifamily owners have been claiming that up to 90 percent of their tenants are paying rent, the Journal reported. But asking rents in cities like New York have fallen about 15 percent since August 2019, the Journal reported, citing data from Green Street Advisors on publicly traded apartment landlords. And investors are preparing for a possibility of more vacancies once landlords are allowed to evict tenants.

Apartments have been hit the hardest by the coronavirus crisis in pricey coastal cities like New York and San Francisco, according to the report. Asking rents in Bay Area cities dropped 9 percent in July, and fell 6 percent in the Bay Area suburbs.
Apartments in the Sun Belt are faring better, however. One landlord with a high concentration of properties in that region, Mid-America Apartment Communities, said July leasing volume was on pace to exceed its amount year-over-year.

Investors expect to see apartment occupancy decline as landlords are allowed to begin evictions. Many cities and states nationwide have had eviction moratoriums since the pandemic’s early days. Many of those are beginning to roll off. Last week, the CDC issued an order to halt residential evictions through Dec. 31.

Noah Rosenblatt

Talking Manhattan on
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par for the course. Lots of rental managers I talk to say rents are down 15-20% and concessions 1-3 months depending on product. Vacancy near 10% but reports wont show it. I asked them to come on talking manhattan to discuss, but they refused. The idea is to keep the destruction under the msm radar i guess

David Goldsmith

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Manhattan vacancy rate hits grim 5 percent benchmark

The bleak milestone underscores how landlords and renters are struggling these days.

Manhattan’s vacancy rate topped 5 percent in August—a theoretical benchmark for preserving rent-regulated apartments—and just one of several grim records that underscore how weak the New York City rental market has become.

The number of rental listings on the market hit the highest total in 14 years last month, jumping 166 percent. Leases with concessions, like a month or two of free rent, reached the largest market share in nearly a decade of tracking. New signed leases dropped 23.7 percent and rents across the board fell, with the most significant drops at the lower strata, all findings from The Elliman Report for Manhattan, Brooklyn, and Queens rental markets for August.

The bleak milestones underscore how landlords are struggling these days—which you could say translates into good news for anyone looking for a New York City rental. Landlords are having trouble because many renters are suffering and fleeing the city—as a result of layoffs and furloughs, and other pandemic aftershocks, and the impact is being felt in less expensive apartments—reversing a recent trend. Studios and one bedrooms, which have seen strong demand for months, in August saw the most substantial year-over-year declines in median rent in eight years of tracking that metric.

New York City is seeing an “acceleration of existing weakness,” says Jonathan Miller, president and CEO of appraisal firm Miller Samuel and author of the report. He says he was surprised to see Manhattan reach the 5.1 percent vacancy rate so quickly—the highest he’s seen in 14 years of tracking. It hit 4.33 percent in July, and 3.67 in June. In August 2019, it was 1.95 percent.

“We’re two full months past lockdown,” Miller says. “You can’t argue that’s fully attributable to the lockdown.”
He points out that it's partly explained by the exodus of NYC buyers to the suburbs. Yes—buyers are a big factor in the NYC rental market.

In the second half of 2019 and continuing into the early part of 2020, NYC buyers, feeling uncertain about the new federal tax law, put off buying and, instead, scooped up rentals, increasing competition—and pushing up rents. It stands to reason then that the pandemic is pushing these would-be buyers off the fence, out of the rental market (and out of the city), contributing to the vacancy rate leap.
The vacancy rate is the percentage of all the available rental apartments in an area. If 5 percent of NYC apartments are vacant, rent regulation is theoretically supposed to end—the theory being with so many apartments available, NYC is no longer in a housing emergency (many struggling New Yorkers would likely beg to differ). But it won’t happen without the city’s Housing & Vacancy Survey, which it does every three years and was supposed to do this year. But the survey was pushed off.

In addition, State Senator Brad Hoylman introduced a bill that would extend the housing emergency two years after the Covid-19 pandemic has subsided and would keep rent stabilization in place despite the vacancy rate.
"The historic poverty, instability, and safety concerns caused by Covid-19 won't be gone in 2021, when the next vacancy survey is set to be conducted,” Hoylman tells Brick. “The last thing tenants need when facing a once-in-a-lifetime economic and public health crisis is to worry about losing their homes just because the survey happened to fall in a year when many have temporarily relocated to protect their health. I'll continue to advocate that the legislature pass my bill with Assembly member Harvey Epstein to give New Yorkers who rely on affordable housing peace of mind that the rug won't be pulled out from under them."

Miller points out that the 5 percent vacancy rate is an arbitrary number. His opinion is that ending rent stabilization “is never going to happen.”
That may be some comfort, but it’s clear that the market is changing rapidly, which is unsettling. Metrics that usually only shift by 1 to 2 percent, like rent per square foot, dropped nearly 10 percent in August.
“We’re seeing declines of 8 to 10 percent now and when we annualize them it will be a lot more,” Miller says. These weak conditions are not likely to change until we get a vaccine, he says.

Market conditions were not as dramatic across all metrics in the other boroughs. Jumps in inventory were the most notable.
In Brooklyn, Miller found that listings doubled from their year-ago level, reaching an 11.5-year high. And in Queens, listings rose to near record levels while new leases fell for the 13th straight month.

David Goldsmith

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Things have gotten severe enough in the rental market that I don't see how it for affect the sales market. It's certainly crushed demand for investor condos, which (especially in new construction) was a substantial portion of the market.

And as rental prices plummet, people debate leaving the city, and social unrest rises, renting becomes a more attractive proposition for many would-be potential purchasers. Combined with a sales demand which had already substantially receded over the past 5 years, to my eyes this doesn't bode well for the sales market.

So I'm still calling for a bottom 35% to 50% off of peak prices (which would mean we still have a ways to go on the down side from today). I thinkhink we have already seen some examples of this when sellers in niche markets have absolutely needed to sell. As we get more inventory and courts move back into full swing and forebearance ends I think we will see more sellers pushed into that category and that could make the market.

Right now I think new sales listings are outpacing contracts signed by 4 to 1. That can't go on for a prolonged period and not cause a price reaction. At this rate I think we are on track to surpass "post crash" inventory levels within the next month.
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Noah Rosenblatt

Talking Manhattan on
Staff member
interesting. David, when you say peak prices do you mean 2015 peak? If so, I guess one could argue we were down 10--15% pre covid, then add on another 10-15% for covid, extra 10% for fear trades and luxury, and perhaps we are close to that 30% level already from 2015 levels?

one thing for sure, this is not the time to be a forced seller of a luxury nyc property

David Goldsmith

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David Goldsmith

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Here’s where NYC rents fell the most in August
Manhattan inventory up 11.9 percent; vacancies spike in Williamsburg, LIC

Overall apartment availability surged in August but varied greatly from one neighborhood to the next, an analysis by The Real Deal shows.
Manhattanites continued leaving their rentals, especially on the Upper East Side and Upper West Side, and landlords dangled discounts in Queens. The Brooklyn rental market was tepid but was the strongest of the three.

From July to August, Manhattan’s rental inventory jumped 11.9 percent, the analysis found. The highest number of new listings was on the Upper East Side, where 1,272 units came onto the market. The neighborhood ended August with 3,140 vacant rentals, the most in the city and an increase of 21 percent from July.

Vacancy more than doubled in Peter Cooper Village, and nearby Parc East Towers had the highest number of available listings, at 123 units.
Of 43 Manhattan neighborhoods measured by TRD, only Chinatown and Midtown West saw a dip in rental inventory, neither by more than 3 percent.

The median rent on the Upper East Side dropped by 9 percent in August, to $3,000. On the Upper West Side, which had the second-highest bump in inventory, the median dropped just over 5 percent.
Growing supply put downward pressure on rents throughout the city as landlords offered concessions on nearly a quarter of new leases signed in Manhattan. In Brooklyn, almost 20 percent of new rentals included concessions.

In Manhattan, the median price of studios and one- and three-bedroom units fell approximately 5 percent in August; two-bedroom units’ median rent fell 4 percent to $4,450.
Queens stood out as the best place for renters to find bargains. The median price for studios fell 10 percent to $2,140. A typical one-bedroom cost $2,500; two- and three-bedroom units were priced about the same, at $3,200 per month.

In Long Island City, the median rent dropped 9 percent in August as inventory nearly doubled. In Astoria, where inventory grew 20 percent, prices were stable, falling less than 1 percent.
In Brooklyn, Williamsburg inventory grew 11.8 percent as the median rent in the neighborhood fell 3.7 percent. The median in Downtown and Brooklyn Heights fell 6 percent.

Renters nabbed units in the less expensive neighborhoods of Bushwhick, Flatbush and Prospect Heights, where availability fell in August from July.
Across the borough, two-bedroom units held their value, with the median rent ending August where it began, at $3,350. A typical studio went for $2,350 and a typical three-bedroom for $3,787.

One upside for landlords: While vacancy rose overall in August, its rate of increase slowed.
If the trend continues, the nadir for the city’s pandemic-stricken rental market might not be far off.

David Goldsmith

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Northwest Queens sees record number of rental listings in August: Report
A record number of apartments landed on the rental market in August as new lease signings continued to decline in northwest Queens, according to a new report.
This past month, listing inventory rose to the second-highest level recorded by Douglas Elliman, the real estate group that conducted the report. Reaching 642 listings in northwest Queens, the number of listings rose by over 78 percent when compared to August 2019, the report said.
For renters, this means “greater affordability,” according to Jonathan Miller, president and CEO of Miller Samuel, the group who authored the report.

“The market is continuing to weaken by just about every metric that we track,” Miller said. “The primary message is greater affordability.”
And while there was no shortage of available apartments in northwest Queens, the number of new leases signed continued to decline in August, dropping 31.5 percent when compared to August of last year, according to the report. The decline marked the 13th straight month new leases declined year-over-year.
Net effective rent — a calculation of the rent that takes landlord concessions into account — also saw a drop in August, the report found. The metric fell by 8.5 percent, to $2,622, making August the fourth straight month in which the borough saw an annual decline in net effective rent.
According to Miller, the continuation of the declines in these metrics suggests the rental market in northwest Queens was experiencing issues prior to the pandemic.

“The pandemic exacerbated what was already becoming an issue, which was affordability and excess supply,” Miller said. “The market was already seeing softness before the pandemic.”
Nonetheless, there is little doubt that the COVID-19 pandemic affected the northwest Queens real estate market in a major way. Prior to the pandemic, one of the Queens region’s top selling point was its proximity to midtown Manhattan. But as offices were replaced by virtual meeting spaces, including Zoom, being close to Manhattan became less important.
“With the tether between work and home getting infinitely longer, that premium becomes challenged,” Miller said.
Queens wasn’t the only borough to see a surge in listings in August. In Brooklyn, the listing inventory doubled when compared to August 2019 and in Manhattan saw the highest number of listing inventory its seen in the past 14 years, the report said.

Manhattan also saw a 23.7 percent drop in new leases signed while the number of new leases signed in Brooklyn dropped by a little over 2 percent.
While some in the real estate industry suggested that the rental market in Queens may begin to normalize come fall, Miller is less hopeful.
“In the context of the pandemic, there is a lot of uncertainty. We don’t know when that ends, when there’s a vaccine,” he said. “I think there will be continued weakness well into 2021, simply because the pandemic isn’t going anywhere.”

David Goldsmith

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These neighborhoods had the biggest rent drops since March

Since the beginning of the coronavirus pandemic in March, rental prices in Manhattan have dropped by 24 percent. While the market is slowly recovering on the island, with asking rent slightly up over the last month, new data from CityRealty shows which neighborhoods are still reeling from the state-mandated lockdown and overall financial impact of the health crisis. According to the report, the Manhattan neighborhoods that experienced the largest drop in rental prices between March and September include the Upper East Side, specifically part of the southern portion of Fifth Avenue from 59th to 79th Street, and Noho.


Courtesy of CityRealty
In Noho, rental prices have fallen by roughly 49 percent from March to September. In the Park/Fifth Avenue section of the Upper East Side, prices have dropped by 43 percent during the same time period.
It’s important to note, the average rent in both of these neighborhoods is much higher than in most sections of the city, with average monthly rent as recorded this month in Noho around $9,285 and $16,179 on the Upper East Side. The average rent in Manhattan overall is roughly $5,280/month in September, according to CityRealty.

Although the numbers point to a real estate recovery for Park/Fith Avenue to 79th Street, with a 55 percent increase this month in asking rents, it’s still a long way away from what the market looked like there in March. The $16,179/month average rent in that area remains 43 percent lower than the neighborhood’s $28,317/month average six months ago.
Other areas in the borough that have seen a significant drop in prices between March and September include Carnegie Hill, down about 37 percent, Morningside Heights, about 30 percent, and the area encompassing Riverside Drive/West End Avenue, about 27 percent. Again, pricing has increased in all of these neighborhoods this month but has still not fully recovered to pre-COVID-19 days.
CityRealty also found a growing listing inventory in Manhattan, which has climbed by nearly 200 percent. Overall, according to a report by real estate appraisers at Miller Samuel, New York City’s listing inventory reached its highest level in 14 years last month. The number of rental listings in Manhattan jumped from 5,645 in August 2019 to 15,025 in August 2020, according to the report.

David Goldsmith

All Powerful Moderator
Staff member
Manhattan Landlords’ Latest Lure: Free Rent Until Next Year

“Don’t pay rent until 2021,” is the message blaring from a web page of New York apartment listings by Related Cos. Manhattan landlord Stonehenge says you can “Live free for 3” in some of its units. That’s in addition to the Citi Bike membership and American Express gift cards the company is offering students and recent graduates who sign leases. Landlords are growing more desperate as they struggle to fill apartments amid an urban exodus. And they’re no longer reluctant to show their hand: Generous giveaways that just months ago were hashed out behind the scenes are now advertised boldly for anyone browsing online.

“You can’t hide it anymore,” said Gary Malin, chief operating officer of brokerage Corcoran Group, which represents landlords. “Owners are saying to themselves, ‘I’d rather be honest from the beginning, rather than play a game back and forth, and otherwise lose a tenant.’” With many people still working from home, restaurants largely shuttered and schools mostly online, New Yorkers are finding
few reasons to stay put in the city’s costliest borough. Manhattan rental listings soared last month to more than double the inventory from a year earlier, according to appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The vacancy rate jumped to a record-high 5.1% from under 2% last August.

That gives renters leverage, and they’ll choose an apartment with “the best possible deal” over one they love the most, Malin said. “Tenants are filling out four to five applications at the same time and negotiating one offer against the other,” he said. “Owners want to lead with their best foot. If you sit and try to hold on for every last penny, for every last dollar, tenants are just going to go somewhere else.”

Enticements such as a free month, complimentary gym membership or payment of a broker’s fee have long been standard in New York when landlords want to fill units in a slowing market. These days, it’s not uncommon to see pitches for three free months, especially in buildings that have fancy public amenities that have been off limits during the pandemic.

Brookfield Properties is offering three months free at downtown’s New York by Gehry tower. Equity Residential has the same deal on select units at some of its pricier buildings, including Prism at Park Avenue South, where perks include a golf simulator, spin room and an indoor lap pool.

‘Falling Knife’
At Stonehenge’s buildings -- all but one in Manhattan -- occupancy was almost 99% before the lockdown, Chief Executive Officer Ofer Yardeni said. That figure slipped to 85% as tenants moved back with their parents, to the suburbs or to the beach to ride out the summer while working remotely.

Now, with the weather cooling and more businesses reopening, people are starting to consider coming back, and Yardeni is using the sweeteners to get their attention. Stonehenge is offering three free months because its competitors are, too, he said. And behind the scenes, current tenants are being paid as much as $4,000 if they find takers for empty units in the company’s buildings.

“I’ve been in the business for over 30 years and I’ve never seen the market this way,” Yardeni said. “It’s almost like a falling knife.” Related is giving renters up to three free months on new leases at buildings including One Union Square South and Tribeca Tower, a spokeswoman for the developer confirmed. For a time, it also offered brokers a fee equivalent to two months rent -- larger than the traditional payout.

The incentives apply only to new tenants, creating a “slippery slope” for landlords who also need to hang on to existing renters, according to Yardeni. He added that his company offers adjustments on renewals on a case-by-case basis.

With the rental market heading into its typically slowest season, property owners know if they don’t fill apartments now, the job will get even harder in the coming months.

“Most landlords, especially the smaller ones, can’t afford to leave their properties vacant,” said Michael P. Feldman, chief executive officer of Choice New York Cos., one of New York’s biggest apartment managers. “You’ll start to see four to five months of free rent consistently throughout the winter.”

While offering such big breaks sounds like surrender, it’s actually a smart move, according to Malin.

“Whatever you give away, you’re bringing in tenants quicker, you get rent quicker,” he said. “You start to mitigate your losses and you’ll come out ahead.”