Is the rental market going to crash?

[John Walkup]

Ha - exactly!

And (putting on the rose colored glasses) every shared apartment that splits into 2 or 3 separate apartments means new retail home goods sales as they buy shower curtains, pots/pans, glasses, sheets, etc...

 

[David Goldsmith]

“Exodus” Havoc: Rents Plunge in San Francisco, New York, Boston, Seattle, Other High-Cost Cities, but Soar 50% in Newark in 18 Months, with Double-Digit Jumps in 20 Cities | Wolf Street

wolfstreet.com

“Exodus” Havoc: Rents Plunge in San Francisco, New York, Boston, Seattle, Other High-Cost Cities, but Soar 50% in Newark in 18 Months, with Double-Digit Jumps in 20 Cities​

by Wolf Richter • Jan 4, 2021 • 136 Comments​

OK, it’s getting a little crazy: Massive shifts due to working from anywhere and the Pandemic. But some of those shifts started well before the Pandemic.​

By Wolf Richter for WOLF STREET.​

In the exodus cities, rents continued plunging in December. For example, in San Francisco, the median asking rent for one-bedroom apartments fell 1.5% from November and is now down 28% from June 2019; in New York City and in Seattle, rents fell about 2.5% for the month and are down 21% from July 2019. But in Newark, where some New York apartment dwellers that are working from anywhere have fled to, rents have skyrocketed by 50% since July 2019. Newark?!?
Yup, in Newark, the median asking rent for one-bedroom apartments in December jumped by 8.1% from November, and is up by 30% from a year ago, and by 50% from June 2019. This surge in rents has catapulted Newark into the rarefied air of the 9th most expensive major rental market in the US, up from 40th place in June 2019 (more in a moment on those expensive rental markets that are dominated by big double-digit decliners):

Rents are depicting the massive shifts playing out in the US housing market, brought about by the Pandemic and by working from anywhere and perhaps by a general urge to rethink things.

San Francisco rents in breath-taking downward spiral.​

San Francisco remains the most expensive rental market in the US only because rents are also plunging in New York City. The median asking rent in December for 1-BR apartments dropped another 1.5% from November, and by 24% year-over-year, and by 28.5% from June 2019, to $2,660, according to data from Zumper’s Rent Report. In terms of dollars, the drop since June 2019 amounted to $1,060 a month.
This does not include the widely advertised incentives of “two months free,” or getting popular, “three months free,” which cut effective rents for the first year by an additional slice:

For 2-BR apartments in San Francisco, the median asking rent dropped by 2.0% in December from November, and by 22% year-over-year, to $3,500. Since June 2019, it has plunged by 27%, or by $1,300 a month, not including the incentives.
These are median asking rents in apartment buildings, including apartment towers. There are now reports of vacancy rates of 30% in luxury apartment towers in San Francisco, with landlords advertising “three months free.”
“Asking rent” is the advertised rent of a rental apartment, but does not include concessions, such as two months free. “Median” asking rent is the middle asking rent, with half of the asking rents higher and half lower.
Zumper collects this data from the Multiple Listings Service (MLS) and other listings, including its own listings, in the 100 largest markets of the US. These are rentals in apartment buildings, including new construction, but do not include single-family houses for rent and condos for rent.

New York City rents plunged.​

The median asking rent for 1-BR apartments in New York City in December fell by 2.4% from November, and by 19.7% year-over-year, to $2,410, according to Zumper data. Since July 2019, the median 1-BR rent has plunged by 21%:

New York City’s 2-BR rents plunged 6.1% in December from November, by 22.4% year-over-year, and by 25% since October 2019, to $2,630. There are now reports of soaring vacancy rates even at the very high end, in iconic apartment towers in the center of Manhattan, such as the “New York by Gehry” 76-story tower with nearly 900 apartments, where vacancy rates jumped to nearly 30%.

Seattle rents plunged.​

In December, the median asking rent for 1-BR apartments in Seattle dropped by 2.6% from November, by 20.6% year-over-year, by 21.5% since October 2019, and by 25% since the peak in May 2018, to $1,500:

The charts above show that the trends in rents started in 2019, well before the Pandemic, but that the Pandemic lit a fire under those trends.
These are rents in apartment buildings, including apartment towers. They reflect the pressures on rents from two directions: The exodus from certain big cities with ridiculously high rents, which had started before the Pandemic, and the exodus from apartment towers given the virus transmission risks in potentially crowded environments, such as elevators. And that exodus has headed to apartments in cheaper areas, such as Newark, and to single-family houses, for sale and for rent, further afield, that no market was prepared for.

The 17 most expensive rental markets.​

The new arrival in the table below of the most expensive major rental markets by median asking rents: Newark, NJ, with a year-over-year jump of 30% for 1-BR rents and a jump of 25% for 2-BR rents.
The shaded area shows peak rent and the changes from peak rent. The black entries in the shaded area indicate rent records set in December. Of the 17 markets, 14 booked double-digit drops in 1-BR rents from their respective peaks in prior years, with Honolulu topping out at -32.9%, followed by Chicago at -30.2%, and San Francisco at -28.5%!

The 24 cities with the Cheapest 1-BR rents:​

These are the low-cost rental markets, where the median 1-BR asking rents range from $580 in Akron, OH, to $860 in Detroit. In some cities, rents are dropping, such as in Akron (-6.5% year-over-year). But in many cities at the cheap end, rents are rising, and in a few, rents are soaring, particularly in Tucson (+13.4%) and Detroit (+19.4%), whose downtown has been revitalizing for a decade:

The 24 Cities with lowest 1-BR rents, $ & Y/Y%
1	Akron, OH	$580	-6.5%
2	Wichita, KS	$640	-4.5%
3	Lubbock, TX	$650	0.0%
4	Shreveport, LA	$660	1.5%
5	Tulsa, OK	$660	3.1%
6	Laredo, TX	$690	-2.8%
7	El Paso, TX	$700	4.5%
8	Lexington, KY	$740	1.4%
9	Oklahoma City, OK	$760	0.0%
10	Tucson, AZ	$760	13.4%
11	Albuquerque, NM	$780	11.4%
12	Lincoln, NE	$780	-3.7%
13	Augusta, GA	$800	6.7%
14	Baton Rouge, LA	$800	5.3%
15	Greensboro, NC	$800	11.1%
16	Tallahassee, FL	$800	-3.6%
17	Bakersfield, CA	$810	0.0%
18	Omaha, NE	$810	1.3%
19	Winston Salem, NC	$810	1.3%
20	Memphis, TN	$830	7.8%
21	Syracuse, NY	$830	2.5%
22	Columbus, OH	$850	6.3%
23	Knoxville, TN	$850	4.9%
24	Detroit, MI	$860	19.4%

The 26 Cities where 1-BR rents dropped.​

In December, the median asking rent for 1-BR apartments fell year-over-year in 26 of the largest rental markets. In 19 of them, rents fell by 5% or more. In 11 of them, rents fell by the double digits, all but one of them the usual suspects on the list of the 17 Most Expensive Rental Markets. But rents also dropped in some of the cheapest rental markets, such as Akron, OH; Tallahassee, FL; Wichita, KS; and Laredo, TX:

The 26 Cities where 1-BR rents dropped YoY
1	San Francisco, CA	$2,660	-24.0%
2	Oakland, CA	$1,950	-22.0%
3	Seattle, WA	$1,500	-20.6%
4	New York, NY	$2,410	-19.7%
5	Boston, MA	$2,150	-17.0%
6	San Jose, CA	$2,090	-14.7%
7	Washington, DC	$1,930	-14.6%
8	Los Angeles, CA	$1,960	-13.3%
9	Salt Lake City, UT	$1,000	-13.0%
10	Pittsburgh, PA	$1,080	-10.7%
11	Honolulu, HI	$1,430	-10.6%
12	Nashville, TN	$1,250	-9.4%
13	Buffalo, NY	$1,040	-8.8%
14	Philadelphia, PA	$1,370	-8.7%
15	Minneapolis, MN	$1,270	-8.6%
16	Denver, CO	$1,410	-8.4%
17	Akron, OH	$580	-6.5%
18	Miami, FL	$1,650	-5.2%
19	Madison, WI	$1,090	-5.2%
20	Irving, TX	$1,040	-4.6%
21	Wichita, KS	$640	-4.5%
22	Chicago, IL	$1,430	-4.0%
23	Lincoln, NE	$780	-3.7%
24	Tallahassee, FL	$800	-3.6%
25	Orlando, FL	$1,220	-3.2%
26	Laredo, TX	$690	-2.8%

The 32 Cities where rents jumped between 6% and 30% YoY.​

In December, the median 1-BR asking rent increased year-over-year in 68 of the 100 largest rental markets. In six markets, there was no change.
In 32 of these markets, rents jumped by 6% or more. In 19 of them, rents jumped between 10% and 30%, including five markets with year-over-year rent increases over 20%. Some of them, formerly among the cheapest markets, have been storming up the scale:

The 32 Cities where 1-BR rents jumped 6%-30%, YoY
1	Newark, NJ	$1,730	30.1%
2	St Petersburg, FL	$1,270	25.7%
3	Cleveland, OH	$1,180	25.5%
4	Indianapolis, IN	$1,000	22.0%
5	St Louis, MO	$1,000	22.0%
6	Detroit, MI	$860	19.4%
7	Virginia Beach, VA	$1,190	19.0%
8	Fresno, CA	$1,160	17.2%
9	Spokane, WA	$890	17.1%
10	Richmond, VA	$1,300	16.1%
11	Chattanooga, TN	$1,030	14.4%
12	Providence, RI	$1,530	14.2%
13	Tucson, AZ	$760	13.4%
14	Boise, ID	$1,130	13.0%
15	Henderson, NV	$1,270	11.4%
16	Albuquerque, NM	$780	11.4%
17	Greensboro, NC	$800	11.1%
18	Sacramento, CA	$1,430	10.9%
19	Norfolk, VA	$1,020	10.9%
20	Rochester, NY	$1,020	9.7%
21	Chandler, AZ	$1,320	9.1%
22	Las Vegas, NV	$1,030	8.4%
23	Mesa, AZ	$970	7.8%
24	Memphis, TN	$830	7.8%
25	Gilbert, AZ	$1,330	7.3%
26	Corpus Christi, TX	$880	7.3%
27	Colorado Springs, CO	$1,070	7.0%
28	Durham, NC	$1,090	6.9%
29	Jacksonville, FL	$960	6.7%
30	Augusta, GA	$800	6.7%
31	Columbus, OH	$850	6.3%
32	Louisville, KY	$880	6.0%

The Largest 100 rental markets.​

Below are the top 100 rental markets, with 1-BR and 2-BR median asking rents in December, and year-over-year percent changes, in order of 1-BR rents. You can search the list via the search function in your browser. If your smartphone clips the 6-column table on the right, hold your device in landscape position:

Rents, Top 100 Cities	1-BR $	Y/Y %	2-BR $	Y/Y %
1	San Francisco, CA	$2,660	-24.0%	$3,500	-22.2%
2	New York, NY	$2,410	-19.7%	$2,630	-22.4%
3	Boston, MA	$2,150	-17.0%	$2,610	-10.9%
4	San Jose, CA	$2,090	-14.7%	$2,650	-8.9%
5	Los Angeles, CA	$1,960	-13.3%	$2,700	-11.8%
6	Oakland, CA	$1,950	-22.0%	$2,560	-14.7%
7	Washington, DC	$1,930	-14.6%	$2,650	-12.8%
8	San Diego, CA	$1,800	0.6%	$2,400	0.4%
9	Newark, NJ	$1,730	30.1%	$1,950	25.0%
10	Santa Ana, CA	$1,700	5.6%	$2,400	13.7%
11	Fort Lauderdale, FL	$1,680	4.3%	$2,090	-4.6%
12	Anaheim, CA	$1,660	1.2%	$1,990	-1.0%
13	Miami, FL	$1,650	-5.2%	$2,170	-3.6%
14	Long Beach, CA	$1,600	0.0%	$2,090	4.5%
15	Providence, RI	$1,530	14.2%	$1,880	17.5%
16	Scottsdale, AZ	$1,520	2.0%	$2,020	-3.8%
17	Seattle, WA	$1,500	-20.6%	$2,000	-14.5%
18	New Orleans, LA	$1,460	3.5%	$1,690	3.7%
19	Atlanta, GA	$1,430	0.7%	$1,870	4.5%
20	Chicago, IL	$1,430	-4.0%	$1,750	2.9%
21	Sacramento, CA	$1,430	10.9%	$1,730	18.5%
22	Honolulu, HI	$1,430	-10.6%	$2,000	-7.0%
23	Denver, CO	$1,410	-8.4%	$1,910	-3.5%
24	Portland, OR	$1,400	2.9%	$1,770	4.1%
25	Philadelphia, PA	$1,370	-8.7%	$1,700	3.7%
26	Gilbert, AZ	$1,330	7.3%	$1,580	9.0%
27	Chandler, AZ	$1,320	9.1%	$1,530	7.0%
28	Richmond, VA	$1,300	16.1%	$1,450	6.6%
29	Henderson, NV	$1,270	11.4%	$1,430	5.9%
30	Minneapolis, MN	$1,270	-8.6%	$1,690	-6.1%
31	St Petersburg, FL	$1,270	25.7%	$1,720	25.5%
32	Nashville, TN	$1,250	-9.4%	$1,450	3.6%
33	Austin, TX	$1,230	0.0%	$1,520	0.0%
34	Orlando, FL	$1,220	-3.2%	$1,400	-2.1%
35	Dallas, TX	$1,210	4.3%	$1,640	3.1%
36	Baltimore, MD	$1,200	1.7%	$1,450	2.8%
37	Plano, TX	$1,200	0.8%	$1,550	-3.1%
38	Charlotte, NC	$1,190	2.6%	$1,420	10.9%
39	Virginia Beach, VA	$1,190	19.0%	$1,330	12.7%
40	Cleveland, OH	$1,180	25.5%	$1,300	30.0%
41	Tampa, FL	$1,180	4.4%	$1,410	6.0%
42	Fresno, CA	$1,160	17.2%	$1,380	15.0%
43	Milwaukee, WI	$1,140	1.8%	$1,320	12.8%
44	Boise, ID	$1,130	13.0%	$1,270	11.4%
45	Chesapeake, VA	$1,120	2.8%	$1,250	3.3%
46	Aurora, CO	$1,100	0.0%	$1,430	1.4%
47	Durham, NC	$1,090	6.9%	$1,250	10.6%
48	Madison, WI	$1,090	-5.2%	$1,390	5.3%
49	Houston, TX	$1,080	4.9%	$1,340	6.3%
50	Pittsburgh, PA	$1,080	-10.7%	$1,300	-5.8%
51	Reno, NV	$1,080	3.8%	$1,390	10.3%
52	Colorado Springs, CO	$1,070	7.0%	$1,350	10.7%
53	Fort Worth, TX	$1,050	2.9%	$1,360	8.8%
54	Raleigh, NC	$1,050	5.0%	$1,250	4.2%
55	Buffalo, NY	$1,040	-8.8%	$1,110	-18.4%
56	Irving, TX	$1,040	-4.6%	$1,370	-3.5%
57	Chattanooga, TN	$1,030	14.4%	$1,180	14.6%
58	Las Vegas, NV	$1,030	8.4%	$1,210	4.3%
59	Norfolk, VA	$1,020	10.9%	$1,100	14.6%
60	Rochester, NY	$1,020	9.7%	$1,210	10.0%
61	Indianapolis, IN	$1,000	22.0%	$1,050	16.7%
62	Phoenix, AZ	$1,000	2.0%	$1,280	3.2%
63	Salt Lake City, UT	$1,000	-13.0%	$1,300	-6.5%
64	St Louis, MO	$1,000	22.0%	$1,260	9.6%
65	Kansas City, MO	$990	5.3%	$1,170	14.7%
66	Mesa, AZ	$970	7.8%	$1,210	9.0%
67	Jacksonville, FL	$960	6.7%	$1,140	11.8%
68	Anchorage, AK	$950	5.6%	$1,150	4.5%
69	Cincinnati, OH	$940	4.4%	$1,130	-3.4%
70	Glendale, AZ	$940	1.1%	$1,170	10.4%
71	San Antonio, TX	$930	5.7%	$1,150	4.5%
72	Arlington, TX	$900	4.7%	$1,180	7.3%
73	Spokane, WA	$890	17.1%	$1,100	6.8%
74	Corpus Christi, TX	$880	7.3%	$1,130	8.7%
75	Des Moines, IA	$880	2.3%	$930	3.3%
76	Louisville, KY	$880	6.0%	$940	1.1%
77	Detroit, MI	$860	19.4%	$1,030	25.6%
78	Columbus, OH	$850	6.3%	$1,090	3.8%
79	Knoxville, TN	$850	4.9%	$1,000	6.4%
80	Memphis, TN	$830	7.8%	$880	8.6%
81	Syracuse, NY	$830	2.5%	$970	-3.0%
82	Bakersfield, CA	$810	0.0%	$1,060	14.0%
83	Omaha, NE	$810	1.3%	$1,040	4.0%
84	Winston Salem, NC	$810	1.3%	$880	6.0%
85	Augusta, GA	$800	6.7%	$900	7.1%
86	Baton Rouge, LA	$800	5.3%	$920	4.5%
87	Greensboro, NC	$800	11.1%	$920	13.6%
88	Tallahassee, FL	$800	-3.6%	$940	4.4%
89	Albuquerque, NM	$780	11.4%	$950	14.5%
90	Lincoln, NE	$780	-3.7%	$920	0.0%
91	Oklahoma City, OK	$760	0.0%	$900	1.1%
92	Tucson, AZ	$760	13.4%	$1,000	14.9%
93	Lexington, KY	$740	1.4%	$920	-3.2%
94	El Paso, TX	$700	4.5%	$850	6.3%
95	Laredo, TX	$690	-2.8%	$950	0.0%
96	Shreveport, LA	$660	1.5%	$740	5.7%
97	Tulsa, OK	$660	3.1%	$830	0.0%
98	Lubbock, TX	$650	0.0%	$820	2.5%
99	Wichita, KS	$640	-4.5%	$730	4.3%
100	Akron, OH	$580	-6.5%	$730	4.3%

 

[David Goldsmith]

New York Rents Continue to Slide, While Sales Rebound in Brooklyn​

Manhattan’s median rent ended 2020 down by 17.3 percent, but the sales market showed signs of life in the other boroughs.

New York Rents Continue to Slide, While Sales Rebound in Brooklyn (Published 2021)

Manhattan’s median rent ended 2020 down by 17.3 percent, but the sales market showed signs of life in the other boroughs.

www.nytimes.com

 

[John Walkup]

Old news to those of us on the front lines!

Today's question is whether or not Brooklyn real estate becomes inventory constrained and what will that do for prices. For example, the med price for 1-bed prewar coops in Prospect Heights over the last 3 months is $650K. Compare that to the UWS where the median price is $655K. Moreover, the median listing discount for those sales in Prospect Heights is -.05% --> Negative - meaning half are trading over ask, whereas on the UWS the discount is 6.6%. I get that consumer tastes and preferences change, but it will be interesting to watch how the perceived value narrative changes.

 

[David Goldsmith]

I wish I could short 1 BRs in Prospect Heights.

 

[John Walkup]

Ha - but just because they may have gone too far too fast doesn't mean they can't keep going up!

 

[David Goldsmith]

How the Pandemic Blew Up Rents (Published 2021)

Wild fluctuations in the cost of rental apartments across the country seem to be slowing after a tumultuous year.

www.nytimes.com

How the Pandemic Blew Up Rents​

Wild fluctuations in the cost of rental apartments across the country seem to be slowing after a tumultuous year.
https://www.nytimes.com/2021/02/04/realestate/how-the-pandemic-blew-up-rents.html#site-content
The impact of the pandemic on New York City real estate has perhaps been most stark in the Manhattan rental market, which had vacancies skyrocket in 2020 as tenants fled to greener places, to less expensive places from which they could work remotely, or to their parents’ homes. But record numbers of new lease signings in the last quarter of 2020 show that renters are once again filling apartments, lured by incentives like slashed rents, free months of rent, and the elimination of fees.
Manhattan can be an outlier when it comes to national real estate trends, but it was far from the only place where the cost of a rental apartment shifted after the pandemic hit. Apartment List’s most recent National Rent Report reveals the cities across the country where rents changed the most from January 2020 to January 2021 — and not all of them went down. It’s the basis of this week’s chart.
Year over year, the report showed, rents are down 1.2 percent nationally. But looking more locally, a pattern emerges: Large coastal cities, including San Francisco and New York, had the greatest rent decreases in those 12 months, while more affordable mid-sized cities, including Fresno, Calif., and Memphis, Tenn., saw the greatest increases.
Now those fluctuations have begun to slow, according to the report, suggesting that a period of stability is setting in. New York, Boston and San Jose, Calif., among the cities with the greatest rent drops in 2020, had small rebounds from December to January; Boise, Idaho, and Chesapeake, Va., among the cities where rents rose the most during 2020, had small decreases. So rents may have reached their upper and lower limits, at least for now.

The median rents listed in this week’s chart may seem low if you’ve been apartment hunting recently. That’s because the methodology used by Apartment List seeks to find the most accurate median for all rentals, not just those available. It begins with median rents reported in the census bureau’s American Community Survey, then adjusts them in several ways to arrive at a truer median for all units.

 

[David Goldsmith]

Manhattan Landlords Offer Record Perks to Fill Empty Apartments

Manhattan apartment landlords are resorting to the biggest move-in concessions on record in an effort to fill empty units during the pandemic.

www.bloomberg.com

Manhattan Landlords Offer Record Perks to Fill Empty Apartments​

• Rents tumbled 19% in January as listings continued to pile up
• Freebies averaged 2.3 months, most in over a decade of data

Manhattan apartment landlords are resorting to the biggest move-in concessions on record in an effort to fill empty units during the pandemic.
In January, the value of incentives on new leases averaged 2.3 months of free rent, the most in more than a decade of data-keeping by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

 

[David Goldsmith]

Long Island City Rentals See Sharp Drop in Occupancy

Two major Long Island City residential projects have seen sharp declines in occupancy from last year.

therealdeal.com

Two huge Long Island City rentals see occupancy plummet

Tishman Speyer, Rockrose saw steep declines in occupancy in 2020​

For years, Long Island City has been experiencing rapid growth: New residential high-rises were built left and right, with thousands of residential units slated for delivery by 2020. Amazon took notice, choosing the Queens neighborhood for the site of its proposed second North American headquarters in 2020.
But a lot can change in a couple of years. Amazon scrapped its plans to move to Long Island City, and then coronavirus hit, leading renters to ditch their new apartments and sending vacancy rates soaring. And that could spell trouble for the developers of those enormous apartment towers.

According to data from Trepp, occupancy at two major residential projects has declined sharply from last year, leading to debt backing those towers being added to the data firm’s watchlist.

At Tishman Speyers’ 1,871-unit Jackson Park, occupancy declined from 96 percent in 2019 to 59 percent as of September 2020. The developer started construction on the project, located at 28-10 Jackson Avenue, in 2015, and it opened in phases starting in 2018. It financed through $1 billion in CMBS debt, which is now on Trepp’s watchlist.
“We have no doubt that we will quickly return to full occupancy once the current pandemic is under control,” a spokesperson for Tishman Speyer said. “In fact, we have seen traffic and leasing activity return to 2019 levels over the past few months. We have been and remain fully up-to-date on our loan service payments.”

Nearby, RockRose Development’s 715-unit Linc LIC, at 43-10 Crescent Street, saw occupancy decline from 91 percent in 2019 to 67 percent in the third quarter of 2020. The property backs a $194.7 million CMBS loan, which is also on Trepp’s watchlist. The firm, led by Henry and Justin Elghanayan, completed the 42-story building in 2014.
RockRose did not immediately return a request for comment.

In 2018, the real estate marketplace Localize.city reported that 6,400 new residential units would be coming to Long Island City in 2020, the most of any neighborhood in NYC. But Covid stymied demand for those units; the number of new leases signed in Northwest Queens, which includes Long Island City, had declined every month for more than a year until recently, according to data from Douglas Elliman’s market reports.

Rents in Northwest Queens, meanwhile, have also dropped sharply. The median apartment price in the neighborhood was $2,400 in December 2020, down from $2,795 in the same period last year. And more than 60 percent of all available listings come with some form of rental concession from landlords.
Both buildings are also packed with amenities that may have once been a draw for renters, but are likely less attractive due to the social distancing required by the pandemic. At Jackson Park, a 50,000-square-foot clubhouse with a golf simulator, poker room and fitness center. At Linc LIC, the high-end perks include a screening room and a billiards table as well as a bilevel fitness center with a basketball court and a squash court.

Apartment landlords have largely been spared from the coronavirus induced devastation that other real estate owners have felt. But increasingly, multifamily owners in New York are showing strains. In some cases, New York renters have left the city or have terminated their leases.
In Manhattan’s Financial District, Brookfield’s New York by Gehry saw rental occupancy fall to 74 percent in September from 98 percent at the end of 2019, according to Trepp. Occupancy at the 899-unit building had remained above 93 percent since 2014.

 

[David Goldsmith]

Extell Development Sells Discounted Stake in Manhattan Rentals

Extell is selling off a 42% stake in two Manhattan rental properties to RXR Realty as it contends with a stagnant luxury apartment market.

therealdeal.com

Extell sells stake in Manhattan rentals to RXR Realty​

42% stake sold at a Covid discount​

Extell Development is selling off a stake in two Manhattan properties as it contends with a stagnant luxury residential market.
The development firm, led by Gary Barnett, will sell a 42 percent stake in a portfolio of rental apartments to RXR Realty, the Financial Times reported.

The transaction includes 750 units across two Manhattan buildings: 555TEN, at 555 10th Avenue in Hell’s Kitchen, and EVGB, at 510 East 14th Street in the East Village.

For RXR Realty, the transaction represents a bargain. It values the portfolio at approximately $800 million, while a pre-pandemic valuation pegged the rentals at $1 billion.

The condo market was sluggish even before Covid delayed construction and all but eliminated international travel, effectively shutting out a significant pool of buyers. That’s bad news for Extell, which developed the Billionaires’ Row towers Central Park Tower and One57. Sales have reportedly been sluggish at the former, and the latter recently recorded a condo resale at a 51 percent loss.

Extell has sought to raise money from hedge funds and issued Israeli bonds. In June 2020, Israeli credit-rating agency Midroog downgraded Extell’s bonds one level, with a negative outlook, due to an expected further decline in condo sales.

Speaking to the Financial Times in late 2020, Barnett said it was “very frustrating to build the most beautiful buildings in the world — super quality, super finishes — and to have to sell at a loss.”

 

[David Goldsmith]

I don't think the vacancy numbers are accurate. They are only counting "listed" units, and most major landlords are only officially listing a fraction of their availability.

Here’s where NYC’s real estate market stands right now

Here are the latest housing prices and forecasts in New York City so you know what to expect when you hit the market.

nypost.com

​

Here’s where NYC’s real estate market stands right now​

By Sarah Paynter
February 23, 2021 | 10:17am | Updated

Here are the latest housing prices and forecasts in New York City so you know what to expect when you hit the market.Shutterstock
New York City was among the first places in the US to be impacted by the coronavirus pandemic, and with its world-famous museums and bars mostly shut down, renters and buyers started looking to greener, suburban pastures — leaving tons of real estate unclaimed and available for cheap.
Here are the latest housing prices and forecasts so you know what to expect when you hit the market. If you’re a buyer, jump here.

​

Renters​

It has never been a better time to be a single renter in the Big Apple. The rental market is booming in NYC, with dirt-cheap prices attracting masses of new leases, the New York Post previously reported.

“It is no surprise that rents have been declining since late March in New York City. They have been declining consistently downward,” said Victor Rodriguez, director of market analytics at the CoStar Group.

Location: Discounts to expect in Manhattan, Brooklyn and Queens​

The best deals in New York City are in Queens, and the best deals in Manhattan can be found on the West Side. Scroll through to see rent discounts in each borough.

Manhattan: Price chops, concessions and discounts — oh my!​

Typical Manhattan apartments went for $3,000 in January — almost 17% less than they did last year, according to New York-based brokerage Douglas Elliman.
But the sticker tag isn’t the only thing renters should be looking for. Owners are giving an average of 2.3 months of free rent as concessions compared to only 1.4 months at the same time last year, according to Douglas Elliman.

“Rent has almost stabilized but the amount of concessions continues to increase. That is a key part of the story, that landlords are offering two to three months rent, waiving amenity fees, paying broker costs,” said Rodriguez. “Owners are throwing in every incentive they can.”
The west side is getting the biggest discounts — 20% — compared to only 17% downtown, 12% on the east side, and only 9% in northern Manhattan, according to Douglas Elliman.
But even with record discounts, Manhattan is pricey. For the lowest sticker price, look to Marble Hill ($1,658 a month), followed by Washington Heights ($2,217 a month) and Inwood ($2,305 a month), according to listing site RentCafe.

Selling like hotcakes, but a long way to go.​

Manhattans discounts are attracting tons of renters: There were 6,255 new leases in January, almost 60% more than at the same time last year. January was the fourth consecutive month of record-breaking new lease signings, said the Douglas Elliman report.


But even though January was super-hot, 5.33% of apartments were still unoccupied — a huge number compared to only 1.73% at the same time last year, according to Douglas Elliman.
“New York City was quite active in January compared to other months. That’s a good sign, but… the hole that gets dug is so deep that even notable gains still leaves you a good time away to reach where you were pre-pandemic,” said Rodriguez. “January was a good month, but we need like 12 of those to make some headway on this.”

Fewer options and a lot of competition.​

But with so much competition from bargain hunters, apartments are getting harder to find. The number of apartments available for lease was down 9.3% in Manhattan, according to Douglas Elliman.

Some analysts say that’s because landlords can’t afford to market them, while others say landlords are “warehousing” them, hoping they’ll get better deals from tenants in a few months.

“Interestingly I have little to show any of my buyers. Some of them are open to extending their current leases until more product comes to market and wider distribution of the vaccine,” said broker Rachel Ostow Lustbader of Warburg Realty.

 

[David Goldsmith]

Exodus from Big Expensive Cities Running out of Steam? Maybe. But Rents in San Francisco & Los Angeles Hit New Multiyear Low | Wolf Street

wolfstreet.com

Exodus from Big Expensive Cities Running out of Steam? Maybe. But Rents in San Francisco & Los Angeles Hit New Multiyear Low​

Massive Pandemic Shifts that triggered plunging rents in the most expensive cities and surging rents in cheaper cities still on display.​

Has the turmoil in the rental market, triggered by work from anywhere and an exodus from the most expensive cities, settled down? Have rents in those cities hit the bottom of the canyon yet? That’s what everyone wants to know. Rents are not going to zero. At some point they stop dropping, as a majestic churn takes place, with people switching apartments to upgrade for the same rent or maintain the same level of quality for less. This churn is taking place in big cities with sharply dropping rents. High lease activity doesn’t mean people are suddenly coming back. It means tenants are switching apartments for better deals.
In San Francisco, the most expensive rental market in the US, the breath-taking downward spiral, after an uptick in January, ticked down to a new multiyear low in February, according to data from the Zumper National Rent Report: The median one-bedroom rent declined to $2,650, down 24% from a year ago and down 29% from June 2019:

The median two-bedroom asking rent in San Francisco remained at $3,500 in January, down 23.6% from a year ago and down 30% from the peak in October 2015 that, after a big dip, was nearly matched in June 2019.hese rent declines in San Francisco now exceed those during the dotcom bust, when rents plunged over three years – from Q1 2001 through Q1 2004 – to get there, and then spent over a decade in the hole.
In Los Angeles, the 1-BR asking rent dropped further in February, to $1,900, down 16% from a year ago, and down 17% from the peak in October 2019:

In New York City, the median asking rent for 1-BR apartments bounced off the multi-year low in January, to $2,460, but was still down 18% from a year ago, and 19% from July 2019.

But rents for 2-BR apartments in New York City continued to fall, hitting $2,550, down 23% year-over-year – further narrowing the spread between 1-BR and 2-BR rents, which has been going on for several years. The 2-BR asking rent had peaked in March 2016 at $3,980. At the time, the spread was $610. Since then, the 2-BR asking rent plunged by 36%. And the spread is now down to less than $100.
In San Francisco, the spread between 1-BR and 2-BR rents also narrowed, but less so, from $1,300 in October 2015, to $850 now.
“Asking rent” is the advertised rent of a rental apartment, but does not include concessions, such as two months free, which have the effect of reducing the rent, without the reduced rent showing up in the data. “Median” asking rent is the middle asking rent, with half of the asking rents higher and half lower. The data here covers apartment buildings, including apartment towers and new construction, but not single-family houses for rent or condos for rent. Zumper collects this data from around 1 million listings on Multiple Listings Service (MLS) and other listing services, including its own listings, in the 100 largest markets of the US.
Newark, NJ, a relatively small city just across the Hudson River from New York City, ended up being the target for a relatively small number of rent refugees from New York City, but given the small size of Newark’s rental market, rents were upended by the influx, and the median 1-BR asking rent skyrocketed by 52% from July 2019, which catapulted Newark into one of the top ten most expensive rental markets. Newark! The price jumps were clearly overdone, potential tenants lost interest, and a correction was overdue.
So in February, the 1-BR asking rent plunged 7.4% from January, but was still up 20% from a year ago, and 41% from June 2019:

This phenomenon of surging rents in smaller cities that are near large expensive cities has been playing out across the US, as part of the work-from-anywhere shift, where there is no reason to pay the huge rents if you don’t have to commute to work anymore, or have to commute only infrequently. Zumper compiled this comparison of the most expensive cities (chart below), where rents dropped sharply, and their less expensive neighboring cities, where rents shot up.
Note that in the Bay Area, rents are down sharply in the three largest cities (San Francisco, Oakland, and San Jose). But in Sacramento, which is about 1.5 hours by car on a good day from San Francisco, and in Fresno, which is about 2.5 hours by car from San Jose, rents have surged (click to enlarge):

In Seattle, the lonesome uptick in January, after spiraling down for months, was neatly undone in February, with the asking rent for 1-BR apartments dropping back to $1,500, down 16% from a year ago, down 21% from October 2019, and down 25% from the peak in May 2018.

In Boston, the median 1-BR rent, after plunging in January, ticked up in February to $2,050, still down 18% from a year ago and 21% from the peak in December 2019:

The 17 most expensive rental markets.​

This list also shows the month and year of peak rent in the shaded area and the decline since then. This is an important figure because in the year-over-year comparisons, the history gets lost, such as the massive declines from their peaks in Chicago and Honolulu, where rents have been bouncing along the bottom of the range for well over a year. Of the 17 cities, 14 experienced double-digit declines in 1-BR rents from their peaks (shaded area):

The 26 Cities where 1-BR rents jumped by 10% or more.​

Beyond the most expensive markets with dropping rents, there is another reality: surging rents. Of the 100 largest rental markets, 1-BR rents rose in 72 of them in February, compared to a year earlier. And in 26 of those cities, rents surged year-over-year by 10% or more, topping out at 20%-plus in three cities. These are huge rent increases, a testimony to the distortions going on in the rental market.
But those three biggest jumps, topping at +22.2% in Indianapolis, are down from the year-over-year jumps in January of 31.6% in Newark, 26.8% in Detroit, and 22.3% in Cleveland. But still crazy:

The 26 Cities where 1-BR rents jumped by 10%+ YOY
1	Indianapolis, IN	$990	22.2%
2	Durham, NC	$1,230	21.8%
3	Newark, NJ	$1,620	20.0%
4	Richmond, VA	$1,330	19.8%
5	Virginia Beach, VA	$1,190	19.0%
6	Boise, ID	$1,210	17.5%
7	Spokane, WA	$920	16.5%
8	St Petersburg, FL	$1,200	15.4%
9	Henderson, NV	$1,300	15.0%
10	Providence, RI	$1,390	14.9%
11	Cleveland, OH	$1,080	14.9%
12	Jacksonville, FL	$1,020	14.6%
13	Colorado Springs, CO	$1,140	14.0%
14	Tampa, FL	$1,250	13.6%
15	Greensboro, NC	$840	13.5%
16	St Louis, MO	$1,020	13.3%
17	Fresno, CA	$1,120	13.1%
18	San Antonio, TX	$970	12.8%
19	Milwaukee, WI	$1,260	12.5%
20	Kansas City, MO	$1,040	11.8%
21	Arlington, TX	$950	11.8%
22	Detroit, MI	$950	11.8%
23	Mesa, AZ	$1,070	11.5%
24	Bakersfield, CA	$890	11.3%
25	Sacramento, CA	$1,430	10.0%
26	Chattanooga, TN	$990	10.0%

The Largest 100 rental markets.​

The table below shows the largest 100 rental markets, with 1-BR and 2-BR median asking rents in February, and year-over-year percent changes, in order of the price of 1-BR rents (if your smartphone clips the 6-column table on the right, hold your device in landscape position):

Rents, Top 100 Cities	1-BR $	Y/Y %	2-BR $	Y/Y %
1	San Francisco, CA	$2,650	-24.3%	$3,500	-23.6%
2	New York, NY	$2,460	-18.0%	$2,550	-23.2%
3	San Jose, CA	$2,180	-11.7%	$2,680	-11.3%
4	Boston, MA	$2,050	-18.0%	$2,500	-13.8%
5	Oakland, CA	$2,000	-15.6%	$2,500	-13.8%
6	Washington, DC	$1,960	-15.9%	$2,660	-14.7%
7	Los Angeles, CA	$1,900	-15.6%	$2,660	-11.3%
8	San Diego, CA	$1,820	4.0%	$2,400	2.1%
9	Santa Ana, CA	$1,700	0.6%	$2,370	8.2%
10	Fort Lauderdale, FL	$1,700	1.8%	$2,190	1.9%
11	Anaheim, CA	$1,680	4.3%	$2,000	1.0%
12	Newark, NJ	$1,620	20.0%	$1,820	16.7%
13	Long Beach, CA	$1,600	2.6%	$2,000	3.6%
14	Miami, FL	$1,580	-12.2%	$2,000	-14.9%
15	Scottsdale, AZ	$1,520	3.4%	$2,070	-0.5%
16	Seattle, WA	$1,500	-16.2%	$1,990	-13.5%
17	Atlanta, GA	$1,500	6.4%	$1,880	5.0%
18	Honolulu, HI	$1,480	-3.9%	$1,900	-9.5%
19	Chicago, IL	$1,460	0.7%	$1,800	5.9%
20	New Orleans, LA	$1,450	5.1%	$1,700	11.1%
21	Sacramento, CA	$1,430	10.0%	$1,820	19.7%
22	Denver, CO	$1,400	-6.0%	$1,920	1.1%
23	Providence, RI	$1,390	14.9%	$1,710	3.0%
24	Philadelphia, PA	$1,390	-4.1%	$1,710	3.6%
25	Portland, OR	$1,380	0.0%	$1,700	6.3%
26	Gilbert, AZ	$1,360	7.9%	$1,590	7.4%
27	Chandler, AZ	$1,330	7.3%	$1,560	9.1%
28	Richmond, VA	$1,330	19.8%	$1,500	11.9%
29	Nashville, TN	$1,320	-5.7%	$1,450	-0.7%
30	Henderson, NV	$1,300	15.0%	$1,390	2.2%
31	Minneapolis, MN	$1,300	-5.8%	$1,800	0.6%
32	Orlando, FL	$1,300	3.2%	$1,410	0.7%
33	Charlotte, NC	$1,280	9.4%	$1,520	16.9%
34	Dallas, TX	$1,270	4.1%	$1,690	1.8%
35	Milwaukee, WI	$1,260	12.5%	$1,310	12.0%
36	Tampa, FL	$1,250	13.6%	$1,400	7.7%
37	Plano, TX	$1,230	2.5%	$1,620	2.5%
38	Durham, NC	$1,230	21.8%	$1,280	15.3%
39	Boise, ID	$1,210	17.5%	$1,310	8.3%
40	St Petersburg, FL	$1,200	15.4%	$1,580	15.3%
41	Austin, TX	$1,190	-5.6%	$1,540	-0.6%
42	Virginia Beach, VA	$1,190	19.0%	$1,320	10.0%
43	Baltimore, MD	$1,180	-0.8%	$1,330	-4.3%
44	Irving, TX	$1,140	0.9%	$1,460	-1.4%
45	Chesapeake, VA	$1,140	2.7%	$1,240	2.5%
46	Colorado Springs, CO	$1,140	14.0%	$1,370	13.2%
47	Aurora, CO	$1,130	3.7%	$1,500	4.9%
48	Fresno, CA	$1,120	13.1%	$1,330	14.7%
49	Salt Lake City, UT	$1,120	1.8%	$1,400	7.7%
50	Houston, TX	$1,110	3.7%	$1,390	6.9%
51	Fort Worth, TX	$1,110	7.8%	$1,420	13.6%
52	Madison, WI	$1,110	-0.9%	$1,410	7.6%
53	Pittsburgh, PA	$1,090	-0.9%	$1,310	0.0%
54	Cleveland, OH	$1,080	14.9%	$1,150	15.0%
55	Raleigh, NC	$1,080	8.0%	$1,270	5.8%
56	Reno, NV	$1,070	7.0%	$1,470	14.8%
57	Mesa, AZ	$1,070	11.5%	$1,350	14.4%
58	Buffalo, NY	$1,050	-1.9%	$1,110	-14.6%
59	Phoenix, AZ	$1,050	7.1%	$1,290	5.7%
60	Kansas City, MO	$1,040	11.8%	$1,170	14.7%
61	St Louis, MO	$1,020	13.3%	$1,280	7.6%
62	Jacksonville, FL	$1,020	14.6%	$1,200	17.6%
63	Rochester, NY	$1,000	3.1%	$1,230	10.8%
64	Las Vegas, NV	$1,000	5.3%	$1,200	3.4%
65	Norfolk, VA	$1,000	8.7%	$1,110	11.0%
66	Chattanooga, TN	$990	10.0%	$1,120	12.0%
67	Indianapolis, IN	$990	22.2%	$1,040	16.9%
68	San Antonio, TX	$970	12.8%	$1,200	10.1%
69	Anchorage, AK	$960	5.5%	$1,170	5.4%
70	Arlington, TX	$950	11.8%	$1,230	11.8%
71	Detroit, MI	$950	11.8%	$1,130	13.0%
72	Cincinnati, OH	$930	3.3%	$1,140	3.6%
73	Glendale, AZ	$930	8.1%	$1,170	9.3%
74	Spokane, WA	$920	16.5%	$1,190	17.8%
75	Louisville, KY	$910	9.6%	$1,000	7.5%
76	Bakersfield, CA	$890	11.3%	$1,110	7.8%
77	Columbus, OH	$880	8.6%	$1,100	2.8%
78	Corpus Christi, TX	$880	4.8%	$1,120	6.7%
79	Des Moines, IA	$850	-1.2%	$900	-1.1%
80	Syracuse, NY	$850	1.2%	$980	2.1%
81	Greensboro, NC	$840	13.5%	$940	13.3%
82	Knoxville, TN	$830	3.8%	$1,020	7.4%
83	Memphis, TN	$830	9.2%	$880	8.6%
84	Baton Rouge, LA	$820	7.9%	$950	8.0%
85	Augusta, GA	$810	8.0%	$910	8.3%
86	Omaha, NE	$810	-1.2%	$1,000	1.0%
87	Tallahassee, FL	$800	-5.9%	$910	-2.2%
88	Winston Salem, NC	$800	3.9%	$890	7.2%
89	Lincoln, NE	$790	2.6%	$900	0.0%
90	Lexington, KY	$780	8.3%	$1,000	8.7%
91	Oklahoma City, OK	$770	-3.8%	$900	-4.3%
92	Albuquerque, NM	$750	7.1%	$950	10.5%
93	Tucson, AZ	$730	7.4%	$960	7.9%
94	El Paso, TX	$720	9.1%	$890	11.3%
95	Laredo, TX	$680	-4.2%	$970	3.2%
96	Shreveport, LA	$650	4.8%	$750	7.1%
97	Lubbock, TX	$650	3.2%	$850	6.3%
98	Tulsa, OK	$630	0.0%	$840	3.7%
99	Wichita, KS	$620	-4.6%	$750	7.1%
100	Akron, OH	$600	-3.2%	$750	2.7%

 

[David Goldsmith]

New York’s Plunging Rents Are Luring Bargain Hunters to Their Dream City

In the wake of the Covid-19 pandemic, some people are discovering that it’s the perfect time to move in.

www.bloomberg.com

New York’s Plunging Rents Are Luring Bargain Hunters to Their Dream City​

In the wake of the Covid-19 pandemic, some people are discovering that it’s the perfect time to move in.

The Covid-19 pandemic spurred many New York residents to move out of cramped apartments and into other places with lower taxes and warmer weather. Others were forced out after losing their jobs.

They left a city stripped of many of the cultural, entertainment and gastronomical perks that had long set it apart, leading to a record vacancy rate in New York apartments. Landlords scrambled to fill spaces, offering Covid “deals,” lowering prices, throwing in free parking or a few months’ rent.

All that has created the perfect opportunity for others to move into the city of their dreams, and lock in rents that have reached the lowest level in a decade.

Covid Deals​

“I’ve always kind of envisioned my 20s here,” said Claire Smith, who moved to Manhattan from Los Angeles in November. “I don’t think realistically we would have been able to afford it had there not been a wave of everyone leaving the city.”

Smith, a 24-year-old blogger and freelance social media manager, had just quit her job in Los Angeles. With the two-year lease on her apartment near West Hollywood coming up for renewal, Smith noticed that rents were getting noticeably lower for apartments on New York real-estate listings website StreetEasy.

She got one month free on a newly renovated two-bedroom at West 10th Street and Bleecker Street that was available for $3,500. Her share of the rent on the fourth-floor walk-up is $1,675.
“I’ve been loving living here,” she said. “I still feel the excitement of the city and am really working on building my own personal brand. New York has helped with that.”

Rents in all NYC boroughs analyzed by StreetEasy showed the fastest year-over-year decline in January in at least a decade, falling 15.5% in Manhattan and 8.6% in Brooklyn and Queens. While the pace of new listings has slowed compared with its peak in the fall, there are still twice as many rentals available in Manhattan and Brooklyn as a year ago, and nearly that many in Queens.

The collapse in rents over the summer coincided with pandemic stats that at the time appeared promising. Covid-19 cases had plateaued, and the specter of the fall’s resurgence was still just a threat.
Kris Taveras didn’t do much research into rent prices before moving to Harlem from Boston last August. “I just packed my stuff and left,” the freelance photographer said. He found a studio apartment sublet on Facebook from someone who lost their job in a Covid-related layoff. The leaseholder agreed to sublet the $1,000-a-month unit for $850.
“I couldn’t have timed it any better,” the 22-year-old said, adding that his rent is significantly lower than the other apartments in his building.
When the current lease ends, Taveras hopes to take over the lease on favorable terms. He doesn’t expect the demand for Manhattan apartments to pick up any time soon.
“I’d be willing to pay a little more because I love this spot, but I feel like the landlord is a bit desperate right now,” he said. “I were to leave this apartment would probably sit empty for three months.”

Kris Taveras found a discounted sublet in Harlem and hopes to eventually take over the lease.
Photographer: Aaron Coss
There are indications that the market is slowly heating up, as offices begin welcoming workers back, restaurants and stores reopen, and the vaccine gives reason for those who left to return.

Although prices remain low, more apartments are getting snapped up, suggesting the market is in recovery mode, according to data analyzed by UrbanDigs, a residential real-estate analytics firm. Meanwhile, inventory has decreased by almost 40% since the height of the pandemic, according to Bill Kowalczuk, a broker at Warburg Realty.

“Things have certainly changed in the rental market. Though brokers’ fees are still paid, mostly, by the landlord, prices are becoming less negotiable. Free-rent incentives are decreasing as well,” Kowalczuk said. “Just as in the sales market, where there are many more buyers, there are many more renters looking as well. The competition will only get more fierce as the weather warms up and more people are vaccinated.”

For now, residents who decided to stay in New York City are basking in the benefits.

Jorge Garcia, 30, thought he had the world’s worst timing when he signed a lease a few days before the city went into lockdown on a one-bedroom East Village apartment. He agreed to pay $2,900 for the fifth-floor walk-up when he moved in March from Puerto Rico.
In July, Garcia, an associate at a law firm, saw a listing for the same unit two floors down for $2,300. He reached out to his landlord and was able to negotiate a discount to $2,700. Rents continued to fall, and by the end of the year, another similar unit was listed for $2,000. When his lease came up for renewal, Garcia asked his landlord to match that price. When the landlord refused, he went into the market for a new spot.

Recovery Mode​

“I mean, look, obviously it’s still New York,” he said of the price. “But definitely I’d say that the rent has gone lower and that you have even more room to negotiate now.”
By early January, Garcia had locked in a new spot in the East Village: a newly renovated two-bedroom apartment in a building with an elevator, gym and rooftop. The rent — originally $3,800 — was lowered to $3,650. He got two months free, which meant the cost worked out to $2,986 a month for the 12 months.
“I’m paying what is the ceiling for my budget, but I’m getting more for it,” Garcia said. “Since I’ll be working from home, I need to be in a comfortable apartment.”

 

[John Walkup]

It's a fragile balance - actvity only increased because rents were low. A lot of landlords seem to be warehousing units at the moment. Perhaps not for better prices but for supply management. Only list what you can lease. Rents will likely remain low simply because there is a lot of supply behind the curtains.

 

[David Goldsmith]

I think the amount of churn is being underestimated. We are seeing record rent reductions and concessions, but in a lot of cases only for new leases. Many landlords are not giving the same deals to existing tenants. So I think a lot of these deals don't necessarily reflect an improving market, but rather tenants who are being given extreme financial disincentives to renew at their current address and extreme financial incentives to move to a new one. I have heard tons of stories of people who had no intention of moving, but they saw they could get bigger/better units practically next door for less money and they pulled the trigger. I have also heard of mass exodus from complexes like Stuyvesant Town/Peter Cooper Village where allegedly they have over 1,000 vacancies.

So if landlords and tenants are engaging in those activities it would seem like landlords are actually in worse shape at the end of the day.

Also I'm going to guess that at this point Cuomo can not afford to alienate any of the new group state legislators who have formed pro-tenant alliances. Look what happened in 2019. Cuomo may have been the last thing standing between owners and the Cancel Rent movement in New York State.

 

[Noah Rosenblatt]

"I have also heard of mass exodus from complexes like Stuyvesant Town/Peter Cooper Village where allegedly they have over 1,000 vacancies."

hearing similar

 

[David Goldsmith]

Manhattan Landlords Take Apartments Off Market During Rental Slump

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.

 

[David Goldsmith]

Manhattan Landlords Warehousing Apartments as Market Slumps

Manhattan landlords are keeping more apartments empty as rents slip, betting that the market will recover as the pandemic eases.

therealdeal.com

Manhattan landlords warehousing units in down market​

Owners yanked 1,814 listings in February​

Apartment landlords in Manhattan are keeping more units vacant as the rental market slumps.
According to real-estate data analytics company UrbanDigs, landlords last month removed 1,814 apartment listings in the borough. The figure is more than three times the number of apartments that were warehoused in February 2020, the Wall Street Journal reported.

As many renters moved out of the city in the pandemic, Manhattan’s apartment vacancy rate went up, and the median rental price fell by more than 17 percent last year, according to a Douglas Elliman report compiled by appraisal firm Miller Samuel.

The peak month for delistings was August, when more than 5,500 apartments were taken off the market, according to UrbanDigs data.

Discounts have lured back prospective renters, and in January, the number of new leases signed in Manhattan was the highest in 13 years, according to Miller Samuel.
Landlords might be warehousing units to avoid signing long-term leases at discounted rent, betting that the market will recover as more people get vaccinated, said John Walkup, co-founder of UrbanDigs.

Housing advocates are appalled by the practice as it exacerbates the city’s housing crisis.
“I think it is unconscionable that some landlords are keeping units off the market, and are just, you know, sitting with their arms crossed waiting for rents to go up,” Assembly member Linda Rosenthal, D-Manhattan, told the Journal.
Rosenthal last year proposed a law to fine landlords who warehouse apartments for more than three months. She said she plans to introduce an updated bill this year.

 

[Noah Rosenblatt]

crazy crazy times

 

[David Goldsmith]

NYC Rents Keep Falling. How Long Will It Last?

The median asking rent for a Manhattan apartment is $700 less than what it was at the start of last year. In Queens, the average rent has dropped below $2,000 for the first time in eight years. And in Brooklyn, rents have fallen 10% since early 2020, the largest year-over-year drop in borough history.

The findings, taken from StreetEasy's first quarter market report released on Friday, offer the latest look at the pandemic's historic impact on rent prices. As the city begins to reopen, the data suggests that prices are unlikely to bounce back to pre-COVID levels anytime soon.

"I think we're getting near the bottom of the market, and I think we'll be at the bottom for quite awhile," Nancy Wu, an economist with StreetEasy, told Gothamist. "We’re in for a long recovery."
#realestate #housingmarket

NYC Rents Keep Falling. How Long Will It Last?

"Theres no need to rush to sign a new lease immediately. Good deals will be there in the next year."

gothamist.com