As expected given the new pandemic driven ‘escape from New York’, the big apple’s rental market has witnessed another record plunged for the month of August. The numbers are staggering according to new analysis featured in CNBC, with the number of apartments sitting empty in once hot and sought-after Manhattan nearly tripling compared to the same month last year.
“There were more than 15,000 empty rental apartments in Manhattan in August, up from 5,600 a year ago, according to a report from Douglas Elliman and Miller Samuel,” CNBC writes. “The inventory of empty units is the largest ever recorded since data started being collected 14 years ago,” it emphasized.
The surge in empty apartments was widespread across the borough. Declines in new leases were seen across the board, from the high to low end segments. The plunge continues from July numbers which registered at 13,000 empty apartments, which was already a record. The average rental price of a two-bedroom apartment sits at about $4,756/month.
In April at the height of pandemic fears, we reported that New York City lease agreements had plunged 38% in March y/y, the second largest drop in 11 years. The trend clearly continued given the flood of workers telecommuting instead of vying for limited rental space downtown.
And the prior shuttering of restaurants, bars, and other once popular night venues, also given the nearly unprecedented levels of day-to-day subway service cuts as ridership plummeted — all of which has removed many of the “benefits” of living in the more expensive city (making the suburbs look increasingly more attractive as the numbers bear out) — is contributing to pandemic slump in the once booming rental market.
Here’s more from the report, detailing it looks to get worse entering what is already a typically slower fall season:
Hopes for a rebound in the fall or the end of 2020 look increasingly unlikely. Although rental prices have come down — median rental prices fell 4% in August — the discounts are not steep enough yet to lure new renters back to the city. The average rental price for a two-bedroom in Manhattan is still $4,756 a month.
The fall is generally a slow period in the Manhattan rental market, especially before an election, Miller said.
Landlords are offering ever-larger incentives to try to entice renters, with the largest share of landlords offering concessions in history. On average, landlords were offering 1.9 months of free rent to new renters in August. The weakest segment of the rental market is the lower end, for one bedrooms and studios, partly a result of the pandemic’s greater impact on lower earners.
Last month, report author Miller Samuel warned: “This could be a difficult couple of years for landlords.”
To review here’s how things looked after merely the first two months of the pandemic, which saw NYC emerge as the early US virus epicenter:
Via Statista: New leases and sales have rapidly fallen since March, when COVID-19 restrictions in the city put a halt to one of the largest real estate markets in the world. Open houses and showings have been non-existent, and the mass exodus of wealthy New Yorkers has curbed any recovery for the months of May and June. Brokers were allowed to resume showing apartments on June 22, which has given prospective renters just two weeks to begin sales again.
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With landlord rental streams quickly evaporating, many will have trouble paying their mortgages and could result in a wave of selling over the next couple of years, sending real estate prices citywide into a possible correction.