Press Clips from Q4 – NYC Rental Market

Posted in Uncategorized on January 20, 2010 at 12:21 pm

Manhattan Apartment Rents Drop 9.4% as City Job Losses Mount

January 14, 2010

Manhattan apartment rents dropped 9.4 percent in the fourth quarter of 2009 from a year earlier as Wall Street jobs vanished in the recession.

The median rent fell for all apartment sizes except two- bedrooms, which were little changed, according to a report today by broker Prudential Douglas Elliman Real Estate and appraiser Miller Samuel Inc. A separate tally by broker Citi-Habitats Inc. showed the average apartment price declined 7.3 percent for the year. The company didn’t report medians.

New York City lost 25,200 finance jobs in the 12 months ended Nov. 30 and the unemployment rate climbed to 10 percent, curbing tenants’ appetite for bigger and more expensive apartments. Joblessness also forced landlords across the U.S. to cut prices as the nationwide vacancy rate reached a record 8 percent in the fourth quarter, New York-based research firm Reis Inc. said Jan. 7.

“I don’t think you’re going to see a significant improvement, if any, in 2010, with unemployment in the 10 percent area,” Miller Samuel President and Chief Executive Officer Jonathan Miller said in a telephone interview.

The effective decline in Manhattan apartment costs was likely greater than either broker reported because the figures don’t reflect concessions such as a free month’s rent, Miller said.

About half of 2009 rentals came with such enticements, said Citi-Habitats President Gary Malin.

“These days, the landlord’s goal is to get tenants,” Malin said.

Prices by Size

The median rent for a Manhattan studio fell 8.5 percent in the fourth quarter from a year earlier to $2,100, Miller reported. One-bedrooms declined 11 percent to $2,850; two- bedrooms cost $4,700 a month; and three bedrooms were down 18 percent to $6,588.

Luxury prices were little changed at $8,663, Miller reported. Many people in that price bracket sold co-ops or condominiums and waiting to buy again, said Shelley Saxton, a broker for Brown Harris Stevens.

“They want to be in a position they can pull the trigger and buy,” Saxton said. “For now, they’re sitting on the sidelines.”

The time apartments spent on the market declined 22 percent to an average of 76 days, Miller said.

Manhattan’s fourth-quarter vacancy rate fell to 1.76 percent from 1.96 percent, Citi-Habitats said.

The company used its own data and counted more than 2,600 deals during the quarter. Prudential Douglas Elliman and Miller Samuel culled their information from 2,456 transactions recorded by the Real Estate Board of New York, a trade organization.

Transactions Rebound

Transactions recorded by Rebny jumped almost 48 percent in the fourth quarter from a year earlier, just after Lehman Brothers Holdings Inc. filed for bankruptcy.

“We’re seeing consumers come back because they’re taking advantage of lower prices,” Miller said. “We’re not arguing that Manhattan is an inexpensive place to live, but relative to what it was, rents are less.”

Citi-Habitats reported a 30 percent increase in rental transactions.

The company handled almost 13,000 rentals in 2009, including almost 2,000 newly built apartments, said Clifford Finn, managing director of new development for the brokerage.

The company’s largest project was Silver Towers, a 1,254- unit complex at 620 W. 42nd St. developed by Silverstein Properties Inc.

Silver Towers features a 24-hour concierge, valet dry cleaning, a fitness center and 75-foot indoor pool. Rents for one-bedroom apartments in the 60-story tower start at $2,965, with the first two-months free on a 14-month lease, Finn said.

SoHo Rents Highest

The SoHo/TriBeCa neighborhood had the highest rates in Manhattan, with one-bedroom apartments averaging $3,145 a month, Citi-Habitats said. SoHo/TriBeCa also had the lowest vacancy rate at 1.05 percent.

Miller, who divided Manhattan into four quadrants, reported the West Side had the highest median rent at $3,495, up 5.9 percent from the fourth quarter of 2008.

Rents fell 19 percent to a median of $2,600 on the East Side between 42nd and 96th streets. Downtown rents dropped 7.7 percent to $3,000, Miller said.

THE REAL DEAL

Manhattan rental deals up in 4Q: reports

January 14, 2010 By Candace Taylor

Manhattan rental transactions surged in the fourth quarter of 2009, according to market reports released by two large city brokerages today (see full reports below).difficult to obtain, firms use different data to compile their reports.) Moreover, listing inventory dropped 21 percent to 5,255 units, from 6,640 during the fourth quarter of 2008, according to the Elliman report, which was prepared by appraiser Jonathan Miller, president and CEO of real estate appraisal firm Miller Samuel.

A marketwide report released by Prudential Douglas Elliman estimated that the number of rental deals in Manhattan leaped 47.6 percent to 2,456 in the fourth quarter, from 1,665 in the same period of 2008. Citi Habitats, the city’s largest rental brokerage, said it did more than 2,600 transactions in the fourth quarter, an increase of 30 percent from roughly 1,800 in the prior-year-quarter.

(In a market where rental data is notoriously

The upswing in activity “is a positive development, and we’ll take it,” Miller said, though he noted that the fourth quarter of 2008 saw particularly low levels of activity because of the Lehman Brothers collapse.

“There was clearly a surge in activity coming from a very low point from this time last year, which was post-Lehman,” he said.

Rental prices, meanwhile, are lower than last year, but not drastically so.

Elliman’s report pegged the average monthly rent of a Manhattan apartment at $3,789, 4.3 percent less than $3,958 in the same quarter of 2008 and roughly on par with third-quarter 2009. The median rental price was $2,900, the report says, dropping 9.4 percent from $3,200 in the prior-year-quarter and 1.7 percent from the previous quarter.

“There’s still weakness out there, but the rate of decline has eased to the point where we’re arguably approaching stable ground, for now,” Miller said.
Citi Habitats, which only tracks apartments rented by its own agents, said average rents fell between 5.8 and 7.3 percent year-over-year, and dipped 1.5 to 3.3 percent from the third quarter.

Neither of the reports account for the incentives that tenants are frequently offered in the current market, like months of free rent or waived brokers fees. Both Miller and Gary Malin, president of Citi Habitats, agreed that if those factors had been taken into consideration, rents would appear considerably lower.

“If you factor in owners’ concessions, rents are probably down 10 percent,” Malin said.

He attributed the uptick in rental activity largely to lower prices and the continuing popularity of these incentives, which helped persuade some renters to move to the city or upgrade to larger apartments.

“The incentives really played an enormous role,” Malin said.

Still, Miller noted, market wide rental activity is far down from the peak, largely because unemployment continues to hover around 10 percent.

His report, for example, found 3,535 rental transactions in the fourth quarter of 2006 — 30 percent more than the same quarter of 2009. The average number of units rented per quarter over the past decade, according to his data, is 4,155.

“We’re definitely getting better, but we’re still not where we were several years ago,” he said. “And that 10 percent [unemployment rate] is what needs to change before you see more rental activity.”

CRAINS NY BUSINESS

Average Manhattan rents dropped 4% last year

By Amanda Fung

Published: January 14, 2010 – 10:51 am

Manhattan apartment rents ended the year down 4% from where they started 2009, but that decline helped to strongly boost the number of new leases signed, according to two market reports released Thursday.

In the final quarter of 2009, the average rent fell to $3,789 down 4% from the same quarter of 2008, according to Prudential Douglas Elliman and appraisal firm Miller Samuel Inc. That figure does not take into account rent concessions.

A second report painted a bigger dip in rents. According to figures from CitiHabitats, the city’s largest rental brokerage, prices in the fourth quarter averaged 7% less than those of a year earlier. Factoring in common landlord concessions, including one to two months free rent, that drop may be as much as seven percentage points more.

However, CitiHabitats also noted an improvement in the final quarter. According to its figures, rents “saw only nominal decreases” from the previous three months. The Elliman and Miller Samuel report showed a tiny, 0.8% rise from the previous three months.

“Average rents are flat. That is what we expected,” said Stephen Kotler, executive vice president of Prudential Douglas Elliman. “There was not much pressure up or down.”

Since rental transaction activity is not public information and is sometimes not shared among different brokerage firms, data trends differ and can be hard to discern, explained Jonathan Miller, chief executive of Miller Samuel. But both reports indicate a glimmer of hope for the rental market.

In a positive sign, the number of apartment leases signed in Manhattan rose 47.5% to 2,456 during the quarter, compared with the same period a year ago, according to Miller Samuel. Meanwhile, CitiHabitats, which compiles its data based on its own closed transactions, reported at least a 30% increase for the quarter. CitiHabitats logged in more than 2,600 deals during the fourth quarter.

“The rental market is stabilizing,” Mr. Miller said. “Just like the sales market, the rental market was unusually robust at the end of the year, but still is generally weak compared to historic norms.”

People took advantage of the incentives and moved to better apartments, Mr. Kotler said. The influx in new rental buildings in Manhattan gave people the opportunity to upgrade. About 3,500 new rental units came onto the market last year, said Gary Malin, CitiHabitat’s president.

The new product pushed rents down last year, giving people an opportunity to move. For instance, people who rented a Murray Hill apartment for roughly $3,200 a month moved to the Upper West Side, a block away from Central Park, for a hundred dollars more, when factoring in free rent concessions, Mr. Kotler said.

But despite the uptick in rental inventory, the absorption of these apartments was positive, especially toward the end of 2009. For the first time between November and December there was a slight decline in vacancy rates, Mr. Malin said. The holidays, cold weather and vacation schedules typically result in a rise in vacancy rates. Instead, vacancy rates dipped slightly to 1.83% last month from 1.87% in November. “The fact that it went down is a good sign,” he said.

Experts remain cautiously optimistic about this year as the unemployment rate, which has a huge impact on the rental market, remains high. “We are looking for more of the same in the first half of 2010—stable activity and pricing,” Mr. Miller said.

RUETERS

Manhattan apartment rents and vacancies off in ‘09

NEW YORK, Jan 13 (Reuters) – Vacancy rates for apartments in New York City’s borough of Manhattan, the largest U.S. apartment market, declined in 2009, as lower rents and better landlord incentives attracted tenants, according to a quarterly brokerage report.

Average Manhattan rents fell about 7 percent last year from 2008. And when incentives like a free month’s rent are factored in, effective prices were down as much as 14 percent, said the report by CitiHabitats, a residential New York City broker that closed on about 13,000 rental deals during the year.

Large apartment landlords such as Equity Residential (EQR.N), AvalonBay Communities Inc (AVB.N), Essex Property Trust Inc (ESS.N), UDR Inc (UDR.N) and Post Properties Inc (PPS.N) have reduced rents and offered perks to retain and attract tenants.

The average Manhattan rent for a studio apartment was $1,800 in the fourth quarter of 2009. A one-bedroom rented for $2,400, a two-bedroom for about $3,400, and three-bedroom apartments went for about $4,600 a month, on average.

Manhattan’s apartment vacancy rate rose slightly during the quarter but remained below 2 percent. Rental vacancies peaked at nearly 2.5 percent in February 2009.

The U.S. vacancy rate hit a nearly 30-year high of 8 percent in the fourth quarter, according to real estate research company Reis Inc, reflecting continued high unemployment

CitiHabitats noted that Manhattan vacancies typically increase from November to December, but the opposite happened last month, suggesting the market has stabilized. It also said price changes have been “minor” for the past nine months, evidence that pricing has found its footing.

Vacancies are highest on the Upper East Side and lowest in the SoHo (south of Houston Street) and TriBeCa (triangle below Canal Street) neighborhoods, according to the CitiHabitats report.

A three-bedroom apartment rents for more than $7,000 in Soho and TriBeCa, triple the price in Harlem and more than double the price in the Morningside Heights area in northern Manhattan.

BLOOMBERG

Manhattan Apartment Rents Drop 9.4% as City Job Losses Mount

By John Gittelsohn

Jan. 14 (Bloomberg) — Manhattan apartment rents dropped 9.4 percent in the fourth quarter of 2009 from a year earlier as Wall Street jobs vanished in the recession.