Trick or Treat: The Manhattan Rental Market Summary

Manhattan Rental Market Summary:


THE BIG PICTURE: GOOD NEWS FOR LANDLORDS
75% of Manhattan real estate consists of rental properties. A loss of several thousands of rental apartments over the past few years (mostly due to conversions to condos) has generated a demand that sends prices soaring. Growth in the employment sector has also contributed significantly to rising rental prices.

Monthly rents have increased amongst all size categories. Last year, average monthly rents for studio apartments jumped 4.8% to $1, 4. 978. Prices rose 4.4% for one-bedrooms, 5.6% for two-bedrooms, and .7% for three-bedrooms. Vacancies are low: .86%.

Average monthly rent for a Manhattan...
studio: $1,965
1 bedroom: $ $2,597
2 bedroom: $3,724
3 bedroom: $4,753

A WINDOW OF OPPORTUNITY FOR RENTERS
It's Halloween season, and sometimes freaks of nature do occur. Luckily for you, the freak of nature is a decline in Manhattan rents. No, it's not a trick. Treats are on the landlord this season!

Here's some helpful info that I took from the New York Real Estate Group report:

Where Prices Decreased:

Upper West Side – This month, the Upper West Side replaced Midtown West as most affordable neighborhood for these units.

Upper East Side – Rents in all apartment sizes declined this month, with the exception of service studios, which posted a nominal increase.

Midtown - If you prefer to live in this bustling area, you’re in luck. Two-bedrooms in Midtown East fell by about $300 this month. Midtown West also saw significant price declines in most unit categories.

Gramercy Park - The doorman sector as a whole is suffering in this neighborhood, as rental prices decreased by hundreds of dollars in all apartment types. Tenants who were priced out of the neighborhood earlier this summer seem to have turned to non-doorman one and two-bedrooms and forgone luxury to remain in the neighborhood.

Greenwich Village - Although there is still demand for studios, all other apartment types here decreased in rent in October. Most noticeably, service 2-bedrooms fell by about $300.

East Village - Doorman two-bedroom rents finally dropped this month, after a steady climb since the end of the 2nd Quarter, thus signaling that even some of the strongest neighborhoods are seeing a reduction in demand at the start of the 4th Quarter.

SoHo -Two bedrooms are losing their appeal, as non-doorman two-bedroom apartment rents are maintaining their decline since January. In the doorman category, two-bedrooms continued their slide since May after briefly leveling off last month.

Lower East Side - Not surprisingly, this area continues to be the best value for doorman apartments regardless of size. Landlords cut rental rates for all properties this October even in this affordable neighborhood.

Tribeca - Landlords were forced to reduce rents in almost all units after pricing them excessively high last month. The exception are Tribeca’s non-doorman studio rents, which remained virtually the same.

Where Prices Increased

Murray Hill - A sure sign that Murray Hill continues to attract more of the young affluent crowd is the fact that regardless of service level, studios and one bedrooms are continuing to fare well.

Chelsea - One-bedroom apartments increased by about $150 in October, continuing its fluctuation only slightly from month to month. Chelsea seems to be the most realistically priced neighborhood, as this trend exhibits.

Financial District - Down below Chambers Street, new luxury developments in the Financial District keep doorman rent rolls up, rivaling prices in its sister neighboring Battery Park City. Deals can now be found in the studio and one bedroom non-doorman sector.

Battery Park City – Rental prices remained relatively stable in October, exhibiting only slight changes each month, as is typical of the neighborhood.


*information was also taken from the 3rd quarter report, 2007, CitiHabitats,

Subprime Shenanigans

The US fallout in subprime loans has certainly caused some problems, and there's no denying that it was the culprit in the global market plunge. However, I didn't see any traders jumping out of windows on Wall Street this morning. For most of us, here is what the market bust translates to:

● It will be more difficult to get a loan if you have bad credit. Yes, subprime borrowers-- this means you! You're likely to be considered a subprime borrower if you have a credit score under 650, have declared bankruptcy in the past 5 years, or are 24 months late in paying back your loans.

● Interest rates for loans on homes over 400k are rising, even for those with great credit. However, rates have gone down on small loans for prime buyers.

● REITs have suffered, but depending on what sort of real estate investment trusts you've invested in, it might just be a waiting game or an opportunity for cheap shares. Talk to your financial advisor.

The big worry is that these supbrime shenanigans will spiral into a recession. Alan Greenspan has dished out a comforting estimate that we have a 66% chance of bouncing back just fine. In fact, the report this morning is that Asian markets are already recovering from the lapse.