Rents expected to spike over next three years

This affects rent in NY how?

Bentall Kennedy has acquired four existing apartment properties during the past year, in Houston, Washington and Florida. The company also is looking at building apartments in the Los Angeles area and in Manhattan, Parker said.

lol, CRE companies telling you that rents will go up... little self-serving, don't you think?

of course, they trot out the statistics to the banks so they can get construction loans.

see, they're already building again.

In this case no. The numbers tell a good story, home ownership rates are coming down big time. Former owners are now renters. The real estate companies are putting their money where their mouth is and building new rental stock. As the article points out, the risk is too many builders get the same idea. So while real estate prices in NY may not to hand stands any time soon, at least rents on these properties can be expected to increase.

Lenders do their own analysis. The days when they "trusted" the person borrowing the money are over. I think its safe to say that any of these projects getting done are doing so with a great deal more equity and with debt service coverage ratios that make sense.

home ownership rates down = negative household creation (household destruction), more likely

AKA Grandma would LOVE to have her grandkids and us live with her!

I actually believe this to some extent. We rented a unit in a Glenwood building around 2 months ago for $6600. The landlord is now seeking $8300 for the same unit on a lower floor. It is shocking.

>This affects rent in NY how?

Agree.

Tho this winter's rents are higher than last's for institutionally-owned rentals in Manhattan.

I'm still seeing places having trouble getting rents they got in 2009. For example, this place has had no takers and is now priced at the last ask price from 2 years ago:

http://streeteasy.com/nyc/rental/719989-rental-220-riverside-blvd-lincoln-square-new-york

Go back to 2007, it was probably going for 20-25% higher. Throw in 4 years of inflation at 2.5%, there's 30% of catching-up to do. (Or if you're an inflation nut who thinks inflation runs at 6%, 50% catching-up to do.) That's a lot of above-inflation increases needed to get back to where things were...

So your basis for comparison is a privately marketed / individually owned apartment seeking $12K/month?

Of course, the fact that this Trump stuff is horribly unattractive and in an area a little bit of a walk from anything resembling Manhattan...

>Of course, the fact that this Trump stuff is horribly unattractive and in an area a little bit of a walk from anything resembling Manhattan...

And it might resemble living in Wayne, NJ more than in Manhattan.

Overall, though.... this ramping up construction on rentals, and saying vacancy rates in his rental buildings are down.

Isn't this horrible news for the sales market?

Rental supply is ramping up because there is an anticipation of increased demand. The fact that there will be an increasing supply will actually serve to keep prices stable. If this anticipated demand doesn't materialize, it will result in an oversupply and LOWER prices. It is an absence of new supply in the face of increased demand that would result in a price spike - absent ramped speculation which doesn't occur in renters, unless they are speculating that home prices drop further.

Nationwide, there will be a lot more renters than buyers over the next decade. In NYC, well, our economy is largely propped up by the Federal government via bailouts for bankers, so it depends on whether the next financial crisis (and make no mistake there will be another one - the problems haven't been solved just delayed) is met with more support for the financial industry or not. If so, we'll see higher rents. If not, we'll see a rather impressive crash.

>our economy is largely propped up by the Federal government via bailouts for bankers

Give me a break. Even Obama has moved on from this rhetoric.

>the next financial crisis (and make no mistake there will be another one - the problems haven't been solved just delayed)

Your "prediction" is meaningless absent a date estimate.

An increase in the percentage of renters vs. owners does not in itself create a shortage in housing supply and increased rent. The number of housing units remain the same and just owned by a smaller number of people; more people end up owning multiple units and then renting them out. Since owners take up more space (less likely to have room mates), a shift toward an increase in percentage of renters would probably result in an increase vacancy rates in the long run as apartments are more densely occupied by renters.

How's your wife doing w67thstreet? Does she have the same cream cheese fetish as you do?

Also w67thstreet, can you please explain your relationship with this thread: http://streeteasy.com/nyc/talk/discussion/22246

"Of course, the fact that this Trump stuff is horribly unattractive and in an area a little bit of a walk from anything resembling Manhattan..."

Yet still, right about when you were buying your SSOs in 2009 when the world was coming to an end, someone took the apt at that same last ask. And someone else bought a unit several floors below in late 2010 that would put the price-to-rent at 25x.

don't world events play into what will happen..

"The number of housing units remain the same and just owned by a smaller number of people; more people end up owning multiple units and then renting them out."

They don't all get rented out... and even some of the ones that do don't leave the sales market.

"Since owners take up more space (less likely to have room mates), a shift toward an increase inpercentage of renters would probably result in an increase vacancy rates in the long run as apartments are more densely occupied by renters. "

This doesn't make any sense. First off, you are confusing correlation with causation. Second, the size of families don't change with a decision to buy and rent. Available inventory doesn't create more humans.

In the end, more people renting and less people buying will push up rental rates and push down prices because you can't shift 100% of the inventory as you seem to be inferring.

somewhereelse, I agree that the unit does not necessarily go off the market and that prices could fall as a result (smaller number of buyers/competition).

As for:
"Since owners take up more space (less likely to have room mates), a shift toward an increase inpercentage of renters would probably result in an increase vacancy rates in the long run as apartments are more densely occupied by renters. "

It makes a lot of sense for me. If you used to own a 1 bedroom and are forced to sell, you might rent a same size or smaller 1 bdrm, a studio, or share a place with a roommate. If you used to own a 1 family house and forced to sell, the house might become someone's investment property and rented out like a 2 family or more (legally or not). The number of people occupying that house will likely increase. That is reality.

"Second, the size of families don't change with a decision to buy and rent. Available inventory doesn't create more humans."

I said nothing about the size of the families changing or that more inventory create more human, though there is a case for the latter.

huntersburg,
>our economy is largely propped up by the Federal government via bailouts for bankers
>>Give me a break. Even Obama has moved on from this rhetoric.

Even Obama? Obama is complicit. His policies are a continuation and an expansion of the crony capitalism we saw under Bush/Paulson/Greenspan. Just replace the names with Obama/Geitner/Bernanke and and double the indebtedness forced on tax payers.

>the next financial crisis (and make no mistake there will be another one - the problems haven't been solved just delayed)
>>Your "prediction" is meaningless absent a date estimate.
So if I told you in 2006 that we'd suffer an economic meltdown due to the imbalances in the system, but didn't provide you with a date for the crash - the crash that occurred 2 years later was somehow meaningless?

Nonsense.

Roro, nice to meet you. What part of town do you live in? My last friend lived in midtown east.

You need wage inflation to see housing inflation. If my wages inflate, I am ok paying more rent. It's fine to buy in anticipation of rising rents, but the math should work on today's rent. So if you want to buy a rental property, it should be priced well on today's rent.

Also, the analysis depends on whether the increase in rents is "real" or "inflationary" If it is simply inflationary (ie, rents don't go up more than inflation), then you can benefit from owning a host of other assets, doesn't have to be real estate...

Roro -- I see you have met one of the resident trolls, Huntersburg. He won't add anything to the conversation -- even when he lamely tries to be funny -- and instead he will following you around saying inane things like "Great, another comment from Roro" or "Moo" (still trying to figure that one out) or sometimes worse. Also, he'll accuse you of being me, as well as several other posters. It must be that he has multiple personalities on the board and therefore assumes that everyone else does. I used to engage him, but others advised that I just ignore him, which seems to work pretty well. Of course, please do want you want, but I thought I would give you a heads up. Good luck and expect a torrent in response to this.

Sorry, should say "please do what you want."

No need to correct yourself when talking to yourself.

MidtownerEast, how come this Virgin poster was so active and then just disappeared:
http://streeteasy.com/nyc/talk/discussion/24949-virgin-post-calling-all-finance-geniusestrolls

How come you are an active poster, but this one populated thread you avoided completely?

And how come both you and streeteasypost both live in a small 1 bedroom for $3200 in midtown east and are about 43 or 44 years of age?

MidtownerEast, I see what you mean - yikes.

huntersburg, because I don't find the time to check out the streeteasy talk section that often, and when I do, I don't typically find topics compelling enough to comment on. Anyway, I have no interest in your inane ramblings but your cyber-stalking is rather creepy and interesting (in the way a documentary on a serial killer may be interesting).

Some real data on our ~1700 sq ft 3BR/3BA in the middle Trump building on RSB:
March 2009: $7,425/month for a one-year lease. Hearsay that that was down more than 20% off its prior lease or peak, can't remember which.
March 2010: $8,100/month (after balking at initially-proposed $9,500/month), i.e. increase of 9%
March 2011: $10,550/month, an increase of 30%.
March 2012: ?

I'd guess that the increase is mainly catch-up from the unusually good luck we had with timing in '09.

160RSB, also you're an existing tenant who has been signing one-year leases and who hasn't been willing to move. would the owners have gotten $10,550 from a new tenant? who knows, but much less likely.

Aboutready,
That was our argument exactly when we tried to negotiate down the $10.5K. The leasing office says there's a waitlist for 3-bedrooms in that building on that street, with people ready to sign at that price. I'm doubtful.

You are doubtful. But are you willing to call their bluff?

I just rented a 2BR/1BA above 96th (c. 1100 ft.). $3700/month (post war contruction rental building). As far as I can tell the rent has not gone up since last year and is down from the peak at $4000. Different market and anecdotal, but at least it is a fairer guess as to the market since that is what they had to drop it to (they were asking $3900) to clear the deal. Additionally, this is a citywide rental landlord.

So in your case it was $10,550 if you didn't want to move, but no telling what the real market rate is from this anecdote.

Bluff called. We're moving.

Still interested in other data points if anyone else out there has recent experience like mine and AvUWS's.

let us know what they are asking if you can find out.

I know when I moved into the place we found that they were a bit surprised 3 2BR's came up in the same month. Could be they got spooked by it, could be people are doing better and moved on up, or vice versa. I just know I am happy where we are now and will be curious to see what happens in a year.

and best of luck in the search. I am guessing you will know much better what is possible in the market once you have looked a bit and maybe you could let us know

It all comes down to this: if more people are going to move to NYC than move out, rents will go up. If more people leave the city than move in, rents will go down. I'm bullish on NYC and so is the company I work for; www.Rent-Direct.com. The amount of rental activity that I currently see is an indicator to me that we are pulling out of our deep recession. No, it's not over yet. But we are definitely moving in the right direct. If new construction doesn't start up soon, there will be a greater shortage next year and the year beyond. Bottom line: rents will go up.

"This affects rent in NY how?"

"Bentall Kennedy has acquired four existing apartment properties during the past year, in Houston, Washington and Florida"

And then NYC will annex them?

Overall, sounds like more people are figuring out that renting can make a lot of sense.

Manhattan “has everything going for it from a multifamily perspective,” said UDR Chief Financial Officer David Messenger, whose company is the third-biggest publicly traded U.S. apartment owner. New York has a great economic base, financial center of the world, extremely high propensity to rent, low home affordability.”

Rent Growth

“Cap rates for Class A apartments in Manhattan have returned to near-peak levels,” the analysts wrote. “Buyers are betting that a rebounding New York City job market and lack of new supply in 2011 will drive 25 percent cumulative rent growth over the next five years.”

The average monthly rent for a one-bedroom Manhattan apartment increased 8.6 percent in February from a year earlier to $2,535, according to brokerage Citi Habitats. Rents for two- bedrooms climbed 9.6 percent to $3,597, while three-bedroom apartments had an average increase of 12 percent to $4,874. Average rents for apartments of all sizes have recovered 11 percent from their January 2010 low of $2,914.

The apartment vacancy rate declined in February to 1.18 percent from 1.54 percent a year earlier, Citi Habitats said.

http://www.bloomberg.com/news/2011-03-18/manhattan-apartments-lure-investors-seeking-a-foothold-in-surging-market.html

Surging rents?

http://www.tregny.com/manhattan_rental_market_report

"The Steady State — Manhattan rental prices appear to have reached a sticking point. Rents are again virtually flat – increasing by 0.45% this month. The largest changes were increases in both non-doorman and doorman studios of 2.39% and 2.31%."

The trend is: Small cheap apartments and less expensive neighborhoods are becoming more popular. Large expensive apartments are falling like bricks.