Manhattan Island Vacancy Rates vs. U.S.

Posted in Market Conditions, Renting on January 7, 2010 at 9:12 pm

While the rest of the countries landlords are dropping prices and have vacancy rates of almost 8%, Manhattan Landlords are in their own bubble, less than 3% vacancy.

Manhattan stands alone when it comes to the vitality of our market as our vacancy rate is nominal when compared to rest of country! – Gary Malin, CEO Citi Habitats

Record U.S. Apartment Vacancies Force Landlords to Cut Rents

By Dan Levy

Jan. 7 (Bloomberg) — U.S. apartment vacancies rose to a record 8 percent in the fourth quarter and rents fell the most in three decades as unemployment cut demand, according to Reis Inc.

Asking rents dropped 2.3 percent from a year earlier to an average of $1,026, the biggest decline since Reis began records in 1980, the New York-based research firm said today. Effective rents, what tenants actually paid, decreased 3 percent to $964.

“Never before have we observed rental properties in so much distress,” Victor Canalog, Reis’s research director, said in a statement. Demand will only recover “when labor markets stabilize,” he said.

The worst U.S. employment slump in the post-World War II era has cost 7.2 million jobs since December 2007. Almost 4.6 million people were collecting extended unemployment benefits at the end of November, according to the Commerce Department. The jobless rate may stay above 10 percent through the first half of 2010, according to a Bloomberg survey last month.

Apartment vacancies continued a “seemingly inexorable march upwards” even with signs the economy is improving, Canalog said.

The apartment vacancy rate increased from 7.9 percent in the third quarter. More than 120,000 units opened in 2009, pushing down rents and making it harder for existing buildings to attract and retain tenants, Reis said. The year-over-year decline in rents tripled the drop seen in 2002, the research firm said.

New York’s vacancy rate decreased to 2.9 percent in the fourth quarter from 3 percent in the third quarter, while effective rents fell 0.7 percent. The city’s rent decline for 2009 was 5.6 percent, the biggest on record.

“Declines in asking and effective rents may be massive, but landlords may at least be retaining tenants as opposed to losing income altogether,” Canalog said.

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