Ticker TOP for 1 MONTH Deal Vol?

inonada

Well-known member
FWIW, I wouldn’t call the behavior of not listing everything warehousing. It’s not like listing all 1000+ apts would make any difference to the rate at which they rent, or the availability of sufficient choice to prospective tenants. Warehousing is not attempting to move those 1000+ apts by (say) dropping price.
 

David Goldsmith

All Powerful Moderator
Staff member
When they don't list every unit officially but just a representative sample it's one thing, but I do think it's warehousing when someone asks specifically about a vacant unit and they say "that unit is rented" when in fact it isn't.

I have been told on multiple occasions, and I believe them, by the agents in the rental office, that they only see as available the same set of units which is listed as available on the website. All the other vacant units actually are being held off the market even if someone knows one is vacant and specifically expresses interest in renting it.

I'm not sure what else to describe such a situation as aside from "warehousing." What do you suggest?
 

David Goldsmith

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Staff member
That just defies reason. Miller Samuel has vacancy across Manhattan at 6.5% right now, not counting the inventory hidden from them. Normally, it’s 2% without anybody hiding inventory. Stuy Town isn’t exactly the most desired place in the city, but somehow they are back at 2%? 2% is what you get if your apts churn every 4 years with listings that last for a month.

Are they offering reduced rent compared to 2019 or concessions? If you’re at 2% mid-summer with a returnee rush, why would you do that?

In short, sounds like BS.
Last year they were offering "up to 3 months" free rent starting August but that ended in December. In January I had a discussion with someone in their rental office who indicated that "nothing is renting" since they stopped (I assume hyperbole).

Units are spot priced so to some extent the price of every unit changes all the time but pulling out 2 units in one building just to give some color:
At 370 1st Ave StreetEasy has unit 9C 05/17/2019 at $3,870. PCVST.com has 6A listed currently at $3,745. Note that in Peter Cooper Village all 1 BRs have the exact same layouts (or mirror image) with 3 different finish levels ("Classic," "Modern," and "Platinum"). The only difference in these 2 units is 9C faces South and slightly higher floor so it gets better light.
 

inonada

Well-known member
When they don't list every unit officially but just a representative sample it's one thing, but I do think it's warehousing when someone asks specifically about a vacant unit and they say "that unit is rented" when in fact it isn't.

I have been told on multiple occasions, and I believe them, by the agents in the rental office, that they only see as available the same set of units which is listed as available on the website. All the other vacant units actually are being held off the market even if someone knows one is vacant and specifically expresses interest in renting it.

I'm not sure what else to describe such a situation as aside from "warehousing." What do you suggest?
Sorry, I didn’t mean to say that they weren’t warehousing. Clearly, they are holding onto units rather than moving them. I was just saying that not listing everything, in and of itself, isn’t warehousing. As I said:

Warehousing is not attempting to move those 1000+ apts by (say) dropping price.

Or (as you are saying) renting unlisted apt out to an interested party.
 

David Goldsmith

All Powerful Moderator
Staff member
Correct. There are valid reasons for not listing everything: like if it's a brand new building and everything is available you don't need to have 500 entries on StreetEasy. Or even if it's that you've got 1,000 available and don't think it's a good business decision to pay StreetEasy $45k per month to officially post them all.

But what I'm talking about is actually claiming units are rented when they aren't, or say when a shareholder calls a public company's Shareholder Relations department and says "I'm a stockholder. I'm trying to decide whether to buy more shares or sell the one's I own. I need a handle on revenues. Can you tell me how many units we aren't collecting rent on at _____________?" and the answer is 'Wr don't give out that information."

I'm also talking about when they are not only giving concessions on initial leases but on renewals, but the information given to various reporting services is just the face rent.

The reason it matters is somewhat the blame of those doing the reporting because I don't think anyone should be labelling the number of units officially on the market as "vacancy" any longer because we know that's fiction. But "everybody" in the chain of custody of the data being presented needs to share in the responsibility of misleading the public by purposely publishing figures which are terms of art rather than meaning what they sound like. Especially when there is plenty of self interest Involved trying to convince consumers to act more quickly/spend more money before they lose out one some deal.

BTW would you think some landlords would be demanding tenants renewing leases sign NDAs if they were in favor of transparency?
 

inonada

Well-known member
It sounds like some LLs think they can bluff their way out of their inventory vs demand problem. The trouble is competition. Right now, there’s a game of musical chairs going between LLs looking for aggrieved churners who missed last year (because they didn’t want to move during the pandemic or whatever) and returnees. When the music stops — after summer for returnees and into early 2022 for churners — LLs will face the reality of post-pandemic Manhattan they’re trying to bluff their way out of. The demand has simply dropped relative to pre-pandemic.
 

inonada

Well-known member
I'll have to go back and try to find exactly what my prediction was but I thought it was more along the lines that we wouldn't see a rebound by winter 2021/2022 than that prices would be significantly lower. I also think that prediction was made significantly before we saw exactly the extent of the massive concessions which would be offered at the beginning of this year?
I think our prediction game started last summer-ish. I think I said last winter would be lower, and your position was indeed that there’d be no rebound (and could possibly be worse).

Here’s a continuation thread from Oct 2020:


The OP’s starting sentence summarized his understanding of our predictions, which we later go on to clarify:

Started by ToRenoOrNotToReno
9 months ago
4Q doesn't sound like the bottoming of the rental market at all -- i.e. more like 30's prediction, not inonada's.

Your words at that time:

As far as rental prices my recollection is that my position was that I thought (and still do) that by August 2021 prices would not be rebounding to (beginning of) August 2020 levels )much less anything close to pre-covid levels). I wasn't going to (and still won't) predict Winter 20201 prices vs Winter 2022 prices because too much of that is based on "fictional" (we can agree to disagree on what "market pricing" is, but what I think the takeaway from this article is that actual market is lagged by what landlords are currently showing publicly at any time) current pricing and no way of knowing when we see reality shown.
 

David Goldsmith

All Powerful Moderator
Staff member
It sounds like some LLs think they can bluff their way out of their inventory vs demand problem. The trouble is competition. Right now, there’s a game of musical chairs going between LLs looking for aggrieved churners who missed last year (because they didn’t want to move during the pandemic or whatever) and returnees. When the music stops — after summer for returnees and into early 2022 for churners — LLs will face the reality of post-pandemic Manhattan they’re trying to bluff their way out of. The demand has simply dropped relative to pre-pandemic.
I agree. I also think LLs trying to compete in this arena means lower prices one way or another now matter how it gets disguised.
 

David Goldsmith

All Powerful Moderator
Staff member
What are you thinking nowadays?

using Miller Samuel’s net effective data:


Pre-pandemic was $3550. Nov 2020 low was $2750. Jun 2021 was $3100.

I think Aug 2021 will come in around $3350, and winter 2021 will drop to bottom around $3100.
While I fully trust that Miller is being honest with his number crunching and evaluation, I am becoming less confident the data he is using is "good." Remember there is really no official source for rentals. It's a mix of whatever gets "officially" listed on various platforms and data which LLs choose to release with zero auditing. It seems clear (to me, at least) that some LLs are intentionally releasing misleading or outright fabricated numbers. So GIGO.

On a different level I'm not sure the Miller median effective rent accurately reflects what prices are doing. As we've discussed "everybody" is trading up quality wise. So even if the median net effective rent was equal, if that number is on a significantly better apartment then it means rents went down. What you need is the moral equivalent of what the StreetEasy Price Index for sales (and various others) attempt to do, which is transaction prices on the same unit over time.

I'm also having trouble lining up some of the numbers. For example the "low" being November 2020. In the market the low felt much more like January 2020 - and the evidence being the peak in inventory, concessions and negotiability (I don't know any reliable index of rental negotiability and I wouldn't trust unaudited numbers from LLs).

It seems like the theme of my responses is that I have lost a decent amount of the trust I had that the maps actually reflect the terrain.

To semi answer your question I think that renters will in general be getting slightly better deals on equivalent units in August 2021 than they got August 2020 (when you include all the renewals which are at lower numbers than the previous lease; and I believe you won't see those numbers reflected in Miller's reports). I think in the high end tenants won't do as well finding deals in January 2022 as they did in January 2021, but I think there is a decent chance that LLs of all the "loser" units in the trade-up wars who have been carrying them vacant for quite some time may be forced to cave and rents for "undesirable" units could reach a low water mark at that time.
 

David Goldsmith

All Powerful Moderator
Staff member
I'll also note that when that SE thread first started it seemed like the title was a wild "How crazy would that be?" given the OP qualified it with "I don't have the foggiest idea as to why he's calling for it except that he's preparing his clients."

But then it actually happened and people just accepted it like it was a foregone conclusion rather than even scant denials of how bad things had gotten. I will claim that even those "perma bulls" couldn't spew their usual irrational twisting of figures with a straight face in light of that.
 

David Goldsmith

All Powerful Moderator
Staff member
Getting back to sales, in 7 weeks we have seen contract signed volume fall by 28%? (OP 1,790; search I just ran says "Units currently in contract in MANHATTAN / NEW YORK starting 1 month ago Showing 20 out of 1292").
Is that "normal seasonality"? Especially since I saw multiple brokers publish stories saying there would be no Summer slowdown this year.

 

inonada

Well-known member
Miller’s data has the bottom is Oct-Jan, IMO: it’s all so close that noise renders the small differences moot.

There is actually a StreetEasy Rent Index based on last asking rent. They use smoothing of the past few months, which causes peaks/valleys to delay a little. So they have the bottom as March.

Anecdotally, in my rather extensive tracking of the high end, the bottom matched Miller’s bottom. And I’d say Nov/Dec were lower than Oct/Jan. While there are a dozen apts that went in Nov/Dec where I thought “Wow, that is cheap, as in 30% lower than anything I’d ever seen pre-2020”, only one lasted beyond Jan.
 

inonada

Well-known member
Getting back to sales, in 7 weeks we have seen contract signed volume fall by 28%? (OP 1,790; search I just ran says "Units currently in contract in MANHATTAN / NEW YORK starting 1 month ago Showing 20 out of 1292").
Is that "normal seasonality"? Especially since I saw multiple brokers publish stories saying there would be no Summer slowdown this year.

Let’s see, after deciding they need to be back in the city by the end of summer, when should a year’s mass of buyers go into contract? August, of course! No???

I think this number is going to continue dropping through the rest of what was promised to you as the hot contract summer.
 

David Goldsmith

All Powerful Moderator
Staff member
Here is one of the items I'm talking about when I say I think some of the data is bad. Now I don't have proof of this so you can take it for what it's worth, but I'm basing it on close to half a century of watching the rental market in NYC. I look at the drop in "inventory" from November 2020 to March 2021 and I just find it non-credible.
A) We know the bulk of new leases signed have been people making lateral for lower rent or up quality at roughly the same rent. For all of those deals the net vacancy is neutral because for each lease signed there is a 1:1 relationship with a new vacancy.
B) That time frame was too early for people who fled NYC due to pandemic to have returned due to being vaccinated (because that really didn't happen for most working aged people until at least April).
C) As I've said before I don't have numbers on this but I find it extremely hard to believe that there were tons of new hires in Big Law, Big Tech, Wall Street, etc. And we also know people in low paying service industry jobs didn't come back because all the employers who lost them are complaining that none of them have come back to work.

So what caused this huge draw down on vacancies? I posit nothing did, and we didn't see a huge drop in actual vacancies, just a huge drop in what LLs were admitting to. I think we probably are still close to peak vacancy and that's a pretty big number. I wish we had good enough data to use to make predictions, but we don't so we can't and have to go by gut feelings.

My gut tells me that if the numbers were as good as they were supposed to be based on the "better act now or you will miss out" stories then we would be getting more transparency. What I'm feeling is more like when the car dealer tells you his offer is only good now and if you walk out the door you'll never get it again.

Note the date on the article and where on the chart was right before:
 

David Goldsmith

All Powerful Moderator
Staff member
None of that should be taken to mean that the stories of apartments coming on the market and being snapped up quickly or even had multiple offers are untrue. But every time I looked at the actual units being talked about they seemed to be "1% of the market" in one way or another. Like a 2-3 BR in a brownstone in Chelsea/West Village or hot neighborhood in Brooklyn. Not 1 BRs in standard apartment buildings which there are 10,000 available.
 

inonada

Well-known member
You know I look at the RE industry with a suspicious eye, and I have no doubt there is all sorts of inventory hiding & warehousing happening. But the trends on the Miller data match what I have seen broadly.

1) Peak inventory was January according to Miller and started really coming down in March. I know of at least 1 returnee that came back in March. Think single people who were tired of wandering, living with family, etc. and wanted to get back to social life in NYC.

2) In the broad high end market, I saw individual condos with no incentive to collude, warehouse, etc. all started getting snapped up over the winter accelerating into the spring. I’m talking things like 100-unit buildings with 10 rental listings dropping to 1 or 0, with many buildings like this.
 

inonada

Well-known member
Here’s an example at the high end with 111 Murray, a condo building where owners have no incentive to warehouse, play games w.r.t. existing tenants, etc. 7 of 157 apts available for rent, 5 in contract with 3.x weeks average time on market:


Looking at (rent date, days on market, annual ppsf for last asks) for a line of west-facing apts in the 40's floor-wise:

45W: 12/9/2020, 172 days, $85 ppsf
47W: 2/17/2021, 190 days, $93 ppsf (and asked $85 ppsf alongside 45W earlier)
43W: 3/15/2021, 216 days, $104 ppsf
44W: 7/2/2021, 13 days, $156 ppsf


That last one is not an aberration. For example, 49E is in contract at $113 ppsf. Using sales prices from 2015 contract dates, 47W sold at $3847 ppsf while 49E sold at $3186 ppsf. That would put the west-side equivalent rental ppsf at $137. That's a far cry from ~6 months on the market & $85 ppsf.
 

inonada

Well-known member
In terms of more standard apt buildings, I had been tracking Prism on SE threads because of their relative transparency & reactivity over the past year. Of the 269 units, listings had reached as high as 49 in late 2020. It is now 7:


Looking at the line of 440 sq ft studios I had been keeping an eye on, 2019 to present:

2/8/2019​
#19A
$3,710​
studio1 bath
440​
3/1/2019​
#18A
$3,455​
studio1 bath
440​
4/16/2019​
#12A
$3,270​
studio1 bath
440​
4/20/2019​
#16A
$3,345​
studio1 bath
440​
4/24/2019​
#13A
$3,450​
studio1 bath
440​
6/2/2019​
#8A
$3,450​
studio1 bath
440​
6/16/2019​
#11A
$3,460​
studio1 bath
440​
7/1/2019​
#4A
$3,450​
studio1 bath
440​
7/29/2019​
#9A
$3,615​
studio1 bath
440​
8/10/2019​
#10A
$3,635​
studio1 bath
440​
10/12/2019​
#7A
$3,425​
studio1 bath
440​
11/29/2019​
#9A
$3,300​
studio1 bath
440​
5/7/2020​
#6A
$3,180​
studio1 bath
440​
5/9/2020​
#7A
$3,295​
studio1 bath
440​
7/1/2020​
#13A
$3,065​
studio1 bath
440​
8/21/2020​
#5A
$2,670​
studio1 bath
440​
9/30/2020​
#19A
$3,380​
studio1 bath
440​
10/7/2020​
#18A
$3,345​
studio1 bath
440​
10/12/2020​
#8A
$2,620​
studio1 bath
440​
10/31/2020​
#10A
$2,820​
studio1 bath
440​
10/31/2020​
#2A
$2,515​
studio1 bath
440​
1/21/2021​
#3A
$2,325​
studio1 bath
440​
2/9/2021​
#4A
$2,280​
studio1 bath
440​
2/13/2021​
#10A
$2,370​
studio1 bath
440​
2/16/2021​
#11A
$2,490​
studio1 bath
440​
3/18/2021​
#19A
$2,895​
studio1 bath
440​
4/3/2021​
#14A
$2,625​
studio1 bath
440​
4/15/2021​
#2A
$2,920​
studio1 bath
440​
5/5/2021​
#17A
$3,340​
studio1 bath
440​
5/14/2021​
#16A
$2,995​
studio1 bath
440​
5/26/2021​
#18A
$3,395​
studio1 bath
440​
5/30/2021​
#7A
$3,120​
studio1 bath
440​
6/13/2021​
#6A
$3,430​
studio1 bath
440​

It doesn't seem like they are playing games, but rather maximizing revenue via market pricing. In particular:

  • The lowest-priced apt available now is $6095. If they were warehousing and/or not listing full inventory, why wouldn't they have anything at a lower price?
  • If they were doing serious amounts of warehousing and/or not listing full inventory, why were they showing 49 apts in winter 2020?
  • If they were "holding the line" on higher rents, why would they go from $3635 for 10A in Aug 2019 to $2370 for the same unit in Feb 2021? And then we see $3450 for 8A in Jun 2019 vs. $3430 for 6A in June 2021. 6A spent 16 days on market and was the last sub-$5500 apt listed for over a month now.
I think talk of "continued heavy rental activity into early 2022" will prove wrong, just like "continued heavy sales activity throughout summer" seems to be proving wrong because it's all driven by return-to-NYC-by-Sept demand. But for the moment, it sure seems like it's here. Prism played it smart, and will probably leave the summer at normal-ish near-full vacancy, with existing tenants primed for renewal increases. Those who have been warehousing will be sitting on empty inventory come the fall & winter, with reduced pricing and demand IMO.
 
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