Manhattan Apartment Renters Winning Price Cuts From Landlords

 

By Oshrat Carmiel

Bloomberg News

April 8, 2010

 

April 8 (Bloomberg) -- Manhattan apartment rents dropped 6.1 percent in the first quarter from a year earlier as landlords cut prices to lure tenants.

 

The median rent fell for all sizes of property except one- bedroom units, broker Prudential Douglas Elliman Real Estate and appraiser Miller Samuel Inc. said today. An analysis by broker CitiHabitats Inc. showed the average monthly price declined as much as 7 percent. The company didn’t report median prices.

 

New York City lost 67,500 private sector jobs last year and 5.4 percent of its finance industry positions in the 12 months ending in February, according to the state Labor Department. Fallout from the recession and credit crisis are still rippling through Manhattan, where 75 percent of the housing stock is rental.

 

“With high unemployment it’s premature to suggest that we know where things are going,” Miller said in a phone interview.

 

The number of rental transactions surged 16 percent in the quarter from a year earlier, with 2,663 new leases signed, according to Miller Samuel and Prudential. Landlords offered average discounts of 6.4 percent off their initial asking prices, down from 8 percent in the same period in 2009.     The declines don’t factor in incentives landlords may offer, such as a free month’s rent.

 

“What they do is adjust the rent to where it’s necessary and then they start offering incentives,’’ CitiHabitats President Gary Malin said in an interview.     About half the new leases signed in 2009 came with landlord-sponsored sweeteners, CitiHabitats said. The proportion ranged from 48 percent in July to 59 percent in December.

 

Lots of Extras

 

    When Jesse Zarouk, 30, was looking for a West Village apartment big enough for the furniture he accumulated in Los Angeles, he got a free month’s rent and $150 off the monthly asking price. The landlord also agreed to tear down a wall and pay CitiHabitats its commission for finding a tenant. That’s a fee Zarouk, a vice president at Cantor Fitzgerald, would have had to pay himself in boom times.

 

For $3,800 a month he landed a 950-square-foot home (88 square meters) big enough for an L-shaped couch, artwork, four guitars, a surfboard and a bicycle, he said.

 

Prices by Size

 

The median rent for a Manhattan studio fell 4.8 percent in the first quarter from a year earlier to $2,048 a month, according to Miller and Prudential. One-bedroom apartments were little changed at $3,000. Two-bedrooms declined 7 percent to $4,645 and three-bedrooms dropped 13 percent to $6,829.

 

The number of apartments listed declined 31 percent to 5,204, according to Miller Samuel and Prudential.

 

CitiHabitats estimated the vacancy rate at 1.38 percent in March, the lowest since August 2008.

 

The broker based its reports on 2,650 rental deals the company handled in the first quarter and almost 13,000 transactions it brokered in 2009. Miller Samuel and Prudential culled information from 2,663 leases recorded by the Real Estate Board of New York and other sources.

 

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net.