The number of vacant apartments for rent in Manhattan rose to its highest level in recent history, above 13,000, when residents fled the city and landlords struggled to find new tenants.
The number of apartments for rent, as an inventory listing, has more than doubled than last year and set a record for the 14 years since data began collecting, according to a report by Douglas Elliman and Miller Samuel. When the number of apartments for rent hit 13,117, the number of new leases signed fell by 23%.
July also saw the biggest drop in rental prices in almost a decade, dropping 10%. Landlords now offer an average of 1.7 months of free rent to try to attract tenants, according to the report, which is also a recent high.
While hundreds of thousands of residents left the city in March and April in the wake of the coronavirus pandemic, brokers and landlords hope that many will start returning in July and August as the city’s lockdown demands and brokers could start showing apartments again. July and August are usually the busiest rental months of the year as families prepare for school. But the weak July, and what brokers say is already a slow August, suggests that Manhattan’s real estate and economic problems may well expand in the fall or beyond.
“Outbound migration is higher than incoming migration at present,” said Jonathan Miller, CEO of Miller Samuel, the assessment and research firm.
Apartments in Manhattan are far from cheap. The average rental price for a two-bedroom apartment is $ 4,620. However, the so-called effective median rent – which people pay with concessions – fell 10% compared to last year, according to Miller. In addition to offering free hair, brokers offer to pay brokerage fees, add gift cards to Home Depot and other retailers, and offer initial cleaning services, brokers say.
All segments of the market, from the high end to the low end, saw declines. And all areas of Manhattan had a sharp drop in new leasing. But the Upper East Side was hit the hardest, with a 39% drop in new leasing.
The rise in vacant apartments in the nation’s largest rental market is likely to have ripple effects across the entire economy. Housing experts estimate that about half of Manhattan’s apartment rentals are owned by small business owners, rather than large publicly traded companies like the large, well-funded real estate families. While small landlords are losing income, they may not be able to afford real estate, which is New York City’s largest source of income. A drop in real estate taxes could result in cuts in services, making New York less attractive to new residents.
“This can be a tricky few years for landlords,” Miller said.
With the Empire State Building in the background, apartment buildings stand in the Chelsea neighborhood of Manhattan in New York City.
Drew Angerer | Getty Images
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