Would be interesting to plot monthly subway ridership against rental activity. The former being a proxy for getting back to work and some level of improved overall activity in the city. Your point about churn makes a ton of sense. I'm also seeing a decent amount of activity crossing back into Manhattan from Brooklyn when it comes to rentals. Especially from areas that are farther in.Manhattan building owners are pulling vacant apartments off the New York City rental market in heightened numbers, with many looking to avoid signing long-term leases at deep discounts.www.wsj.com
This scorched-earth insanity shows how truly bad the rental market is, as well as how a lot of these landlords view themselves vs tenants. Firstly, these are not units which just became vacant - they have been vacant since at least January 1st and in most cases longer, some significantly. Example: the unit across the hall from mine vacated October 1st. It has never been listed on the market and even when I called the leasing office was told it is not available, yet there it sits. So even if prices rise 20% how long will it take to make up 9 to 12 months of vacancy rather than just rent at current market? (Also factor in that if prices rise they would have been able to increase rents on these units anyway). I think this shows these landlords believe "market" to rent out all their units is worse than the reports are saying.
I also think it is a game of brinkmanship to try and trigger the vacancy provision in the New York State Rent Stabilization statute. I predict this is another tactical mistake because in my opinion the same coalitions that handed the Real Estate industry it's head with the totally tenant sided version of the Housing Stability and Tenant Protection Act of 2019 will most probably just change that provision. I also think that Cuomo won't be in a position to prevent it given his recent issues.
Secondly, even if demand does increase significantly, what happens when these units all come flooding back on the market within a short time frame? Supply vs demand in pricing still holds. It won't be worth losing these huge amounts of rent.
Thirdly I think this proves my statement that the uptick in deal volume in January and February is more evidence of market churn rather than "improvement." That is to say rather than tenants moving back I think most of these deals are:
Landlords are giving both discounts off rents and concessions to new tenants but largely refusing to budge on renewals. So a lot of tenants who had no intention of moving but are being given extreme financial incentives to move and disincentives to stay are pulling the trigger. Often times moving very short distances (like the building next door, around the block, etc) to larger spaces for less money. This yields a false narrative of volume meaning the market is "improving." If the market was improving would you ever see this warehousing?
Also note the reaction from legislators and housing advocates. This is not great PR for an industry facing a pretty big "cancel rent due to pandemic" movement. It totally contradicts the narrative of "poor landlords can't afford to lose rents" and "we will go back to 1970s with mass property abandonment." If they can afford to willingly carry large amounts of units vacant with no rent how can they argue that forgiving rent to some occupied units will bankrupt them?
But it's the same in the sales market: if developers really believed how great the sales market was doing what are we still seeing with projects like One Wall Street? It was scheduled to launch sales over 2 years ago and wrap up in 2020. They announced Core as the sales agency but still haven't launched sales. If Macklowe believed the current hype why not? And that's not the only one.