Yikes -Manhattan Rents still rising

Report shows Manhattan rents still rising

Even in a down market, some landlords are still upping rents, according to the Real Estate Group's July Manhattan report.

In the Financial District, which tends to have high vacancy rates, rents in doorman buildings increased 3.3 percent for studios, 4.2 percent for one-bedrooms and 2.6 percent for two-bedrooms, compared to last month. The only decrease the neighborhood had was a 3.5 percent fall in non-doorman two-bedrooms.

Apartments in doorman buildings in Harlem, the Upper West Side, Midtown West and Tribeca all saw average rents increase.

On average citywide, rents in doorman buildings increased and non-doorman buildings decreased compared to June. The average rent for a studio apartment in a doorman building increased .35 percent to $2,561 per month; average rent for a studio in a non-doorman building fell .52 percent to $2,115 per month.

The average price for one-bedroom apartments in doorman buildings was up 1.0 percent to $3,692 per month, while the rent for one-bedrooms in non-doorman buildings fell .65 percent to $2,765 per month.

Two-bedroom units in doorman buildings increased in price by 1.2 percent to an average of $5,560 per month, while those in non-doorman buildings fell 1.4 percent to an average of $3,896 per month. TRD

Oh, houser, it's you again! Long time no hear!

Let's just publish the introductory letter to that information that you post from the Real Estate Group (tregny.com) to put it into perspective:

On behalf of The Real Estate Group, I am pleased to present the July 2008 edition of our Manhattan Rental Market Report, the only research on the city’s rental rates published on a monthly basis.

In the past 19 months that we’ve been reporting data, the Manhattan rental market has seen its share of ups, downs, surprises and confusion, and I’ve witnessed some very interesting changes in the marketplace. This month, however, takes the cake! Never before have I, as a peripheral bystander, seen the kind of inexplicable phenomena happening as is occurring right now, which prompts the statement, “This just doesn’t make sense.”

There is more doorman inventory this month than we’ve seen in a long time, yet prices keep rising. Conversely, prices in non-doorman properties have come down, and inventories for those units have followed suit. But if it’s a widely-accepted fact that the market has, indeed, turned—even the largest companies concede, finally—why are prices continuing to increase in service buildings?

As I’m not an economist, I simply observe what’s before me and attempt to offer insight into market trends. With the market as off-kilter as it is this month, I must conclude that owners of doorman buildings are resistant to lowering prices and, instead, are offering incentives while actually increasing prices to offset those concessions. Unfortunately, this strategy appears to be backfiring, and inventories continue to mount as the season hits the midway point. My main concern is that these accumulating vacancies may not be absorbed even if prices are lowered—which is why, as we head into August, I strongly urge all property owners to take a hard look at their marketing plans for the subsequent months so as not to be overwhelmed by an excess of unrented units as the busy season comes to a close.

Then let's publish what REALLY happened to rents, rather than your manipulative outtake:

Where Prices DECREASED:

Harlem— Non-doorman one-bedrooms (0.8%), non-doorman two-bedrooms (4.4%)

Upper West Side— Non-doorman studios (0.5%)

Upper East Side— Doorman studios (1.4%), non-doorman one-bedrooms (3.7%), doorman one-bedrooms (0.9%), non-doorman two-bedrooms (1.2%)

Midtown West— Non-doorman studios (2%), non-doorman one-bedrooms (0.9%)

Midtown East— Non-doorman studios (6.1%), non-doorman one-bedrooms (3.3%), non-doorman two-bedrooms (4.8%), doorman two-bedrooms (5.3%)

Murray Hill— Doorman two-bedrooms (5%)

Chelsea— Doorman studios (1.6%), non-doorman one-bedrooms (5.6%), doorman one-bedrooms (2%), non-doorman two-bedrooms (1.8%)

Gramercy Park— Doorman studios (2.9%), doorman one-bedrooms (2.1%), non-doorman two-bedrooms (4.9%)

Greenwich Village— Non-doorman studios (1%), doorman studios (1.2%), non-doorman one-bedrooms (0.9%), non-doorman two-bedrooms (0.9%)

East Village— Non-doorman studios (4.6%), non-doorman one-bedrooms (1.5%), non-doorman two-bedrooms (0.3%), doorman two-bedrooms (3%)

SoHo— Non-doorman studios (4.5%), doorman studios (2%), non-doorman one-bedrooms (0.8%), non-doorman two-bedrooms (1.2%)

Lower East Side— Non-doorman studios (2.5%), doorman one-bedrooms (7.2%)

TriBeCa— Non-doorman studios (2.2%), non-doorman one-bedrooms (3.3%), non-doorman two-bedrooms (3.6%)

Financial District— Non-doorman two-bedrooms (3.5%)

Battery Park City— Doorman studios (1.4%), doorman one-bedrooms (1.2%)

Where Prices INCREASED:

Harlem— Non-doorman studios (3.4%), doorman studios (3.7%), doorman one-bedrooms (0.8%), doorman two-bedrooms (0.1%)

Upper West Side— Doorman studios (1.8%), non-doorman one-bedrooms (5.1%), doorman one-bedrooms (2.4%), non-doorman two-bedrooms (0.6%), doorman two-bedrooms (3.5%)

Upper East Side— Non-doorman studios (0.7%), doorman two-bedrooms (4.9%)

Midtown West— Doorman studios (0.7%), doorman one-bedrooms (2.1%), non-doorman two-bedrooms (0.5%), doorman two-bedrooms (4.5%)

Midtown East— Doorman studios (3.2%), doorman one-bedrooms (0.4%)

Murray Hill— Non-doorman studios (1.8%), doorman studios (1.6%), non-doorman one-bedrooms (0.6%), doorman one-bedrooms (3%), non-doorman two-bedrooms (6.4%)

Chelsea— Non-doorman studios (1.3%), doorman two-bedrooms (1.8%)

Gramercy Park— Non-doorman studios (4.8%), non-doorman one-bedrooms (1.1%), doorman two-bedrooms (1.9%)

Greenwich Village— Doorman one-bedrooms (4%), doorman two-bedrooms (0.7%)

East Village— Doorman studios (2%), doorman one-bedrooms (4.6%)

SoHo— Doorman one-bedrooms (4.7%), doorman two-bedrooms (1.6%)

Lower East Side— Doorman studios (0.8%), non-doorman one-bedrooms (5.1%), non-doorman two-bedrooms (4%), doorman two-bedrooms (5.8%)

TriBeCa— Doorman studios (1.3%), doorman one-bedrooms (2.6%), doorman two-bedrooms (1.4%)

Financial District— Non-doorman studios (6.6%), doorman studios (3.3%), non-doorman one-bedrooms (2.4%), doorman one-bedrooms (4.2%), doorman two-bedrooms (2.6%)

Battery Park City— Doorman two-bedrooms (2.9%)

So enough BS - publish the full story.

I was just in FiDi/Battery Park City running around with a renter. Prices were generally stable, but that was more than offset by broker incentives calculated to lower the overall cost of an apartment without changing the "price."

I saw two condo rentals through a major firm where I was TOLD the fee was one-month -- in other words, the owner was offering two weeks rent to the co-broker, rather than the usual 7.5% of a year's rent.

In the residential rental buildings we saw, nearly every unit offered an "OP" -- an incentive of one extra month's rent paid by the owner. My client ended up in one of these buildings.

The reported rent for that apartment is "flat" because the leasing company got the same rent for the unit that it got last year, but in actuality, it's "down" -- because they offered 13 months for the price of 12, which is effectively an 8% rate cut.

I'm seeing some softening in the Village too; rates are, however, going up on high-end inventory, like SoHo/Tribeca lofts.

ali r.
{downtown broker}

I have a friend moving to New York in Dec.'08...is that a time when rents go up or down. thanks.

Will rents be lower in September for UWS doorman apartments than they are today?

I wonder what rents will look like 5 years from now in Manhattan. BTW steve last time an article was posted from tregny you trashed them as propaganda. Tht was because they published rental increase just a month ago. Now you ull out decrease stats leave out increase stats which is more. Keep spinning steve your driving everyone dissy

Just rented a condo-sublet studio in non-doorman building on UWS - $1,900. Last year my customer got a studio in similar pre-war building for $1750

Alcove studio on CPW & 97-100Str. went for $2000, next one coming up in September asking $2300.

Studios in residential rental buildings on west 42 street asking close to $2,300 no "OP", no free rent. Three years ago similar studios on 42str went for $2,050 (I lived in one)

BTW, couple of buildings in Financial District offered "OP" even last summer.

elena
(broker)

"BTW steve last time an article was posted from tregny you trashed them as propaganda. Tht was because they published rental increase just a month ago."

May's I think, because it was. It said everything's great, but nothing's moving. Prices are higher, unless they're lower.

The author must have reconsidered his opinion and decided to be consistent. If the May report had said that everything was all great and everything were rising, I would have had no choice but to agree if they had the data. But their interpretation of the data was whacky.

barskaya: "my customer" = no credibility.

Generally, rents do rise at the beginning of a crash as folks are scared away from buying...

EW is correct, even though rents are not rising: that article - from The Real Deal, a real-estate website, not cited by sneaky (who earns that name for a reason) - manipulatively took a small subset of rising rents from a one-month sample (maybe 4-5 apartments) and said that all rents were rising, but you read the actual article and look at the actual data you can see that that is not the case and, in fact, the authors of the article said there was so much inventory left at the end of the peak season, that they were afraid that that inventory would not be absorbed in the slow second half of the year.

= spin.

"the authors of the article" = "the authors of the report"

Well, the brokers aren't doing much selling, so they have to do SOMETHING with their time...

steve seems to have this bitter, sadistic desire for NYC real estate to crash. He is rooting for it. If the market just stays slow, the banks and Wall Street pick up in the second half, bonuses are decent next year and real estate picks up again, people should be happy. However, steve would just be more angry and bitter and hope more that real estate crashes. Maybe it is eating at him that he has been renting all these years.

You can call him bitter, but you can't call him incorrect.

At least the guy isn't afraid of data...

LICC: "steve seems to have this bitter, sadistic desire for NYC real estate to crash."

Yes - bitter and sadistic.

"He is rooting for it."

If "rooting" = "predicting," then you are correct.

"If the market just stays slow, the banks and Wall Street pick up in the second half, bonuses are decent next year and real estate picks up again, people should be happy."

Big IF.

This I luv: "Wall Street pick up in the second half"

Before or after the remaining $300 billion in write-offs?

This is NOT a prediction, but if the Fed waives the 10% deposit limit rule for banks (easily evaded anyway) and allows, say, Chase to take over WaMu or Wachovia, or BofA to take over National City or something similar, then we are in SERIOUS trouble.

There are only 2 solvent money-center banks: Chase and BofA. The rest are teetering. More write-offs to come. The independence of Lehman and Merrill are in question, and (this is a prediction) they will not survive as independents. I'll make a prediction about Morgan Stanley when I see their earnings this quarter - I surmise they will be better than ML. But we're seeing a massive reorganization of the banking industry, so don't expect the olden days of golden bonuses to come back anytime soon.

> Big IF.

Its not an if, its a NOT. Bonuses can be calculated right now... they're a share of gross revenues. Those have already declined in a *major* way....

Or think of it this way.... banks gave back YEARS of profit this year. When bankers are supposed to share in the profits, and the profits aren't there, what do you think happens?

Eddie, I don't think you can assume the relationship of bonuses as a percent of gross revenue will hold up. My sense is that the Wall Street firms aren't cutting people as deeply as in the last recession (2002-03), but are cutting perks and bonuses. I think a lot more people are going to be living off of their base salaries over the next year.

Eddie, I don't think you can assume the relationship of bonuses as a percent of gross revenue will hold up. My sense is that the Wall Street firms aren't cutting people as deeply as in the last recession (2002-03), but are cutting perks and bonuses. I think a lot more people are going to be living off of their base salaries over the next year.

Eddie - sorry, I re-read your post. I'm basically agreeing with you.

steve is often incorrect. Laughably incorrect, actually. He subjectively applies out-of-context data to fit his angry hopeful conclusion that the market will crash.

"barskaya: "my customer" = no credibility."

steve, unfortunately you are the one without credibility. The only news you believe and support is bad news. To have credibility, you need to accept reality. Right now, rents are going up in some cases and they are going down in others. Making blanket statements like "rents are going down" are not only incorrect but, I believe, it cheapens what you have to offer the people on this board. You are becoming a bit of a one trick pony and it is becoming more obvious every day. Will your opinions be completely useless in a bull market?

“At least the guy isn't afraid of data...”

EddieWilson, data is a wonderful thing, but it can be manipulated however the user would like to support his/her views. steve can show data that points to a 24x price to rent ratio in Manhattan and I could just as easily take that data and show it is 17x. The thing is, neither of us may be wrong, but data is highly subjective. I view steve’s data as worst case scenario and do my own analysis to determine what my personal comfort zone is. Relying on steve (or anyone else’s) data to make decisions is silly, especially when making a decision as important as buying a home.

"steve is often incorrect."

Often I am, but usually I'm not.

"Laughably incorrect, actually."

¿?

"He subjectively applies out-of-context data to fit his angry hopeful conclusion that the market will crash."

No. I apply the data that are published and accepted, using the methodologies and theories that are published and accepted. You make up your own with no basis in fact, then declare victory. Cool, but not useful.

"The only news you believe and support is bad news."

Untrue. Just basically the only news out there is bad.

"To have credibility, you need to accept reality."

I could say that to you, as well.

"Right now, rents are going up in some cases and they are going down in others."

Absolutely 100% true, and it always will be. There. Did I "accept reality"?

"Making blanket statements like "rents are going down" are not only incorrect but, I believe, it cheapens what you have to offer the people on this board."

When I made that statement (May) those were the data - the largest YOY increases for market-rent apartments were at the rate of stabilized apartments. Ergo, inflation-adjusted, going down. The situation changed slightly in June. Accepted. That change, however, has led to swelling inventories.

Do you accept that?

"Untrue. Just basically the only news out there is bad."

No it's not. You continue to post bad news and discredit anything positive. There are some positive and less negative developments occurring on a daily basis. We are no way out of the woods, but life seems to be creeping back.

"I could say that to you, as well."

Sure you can, but when I'm considered a bull because I think things will be flat, you have to wonder who the extremist is.

"EW is correct, even though rents are not rising:"

Maybe I misunderstood your statement, but you said this on this thread, not in May.

"Ergo, inflation-adjusted, going down."

I'm not sure how "inflation-adjusted, going down" impacts today's price to rent ratios but I do accept your statement.

""EW is correct, even though rents are not rising:"

"Maybe I misunderstood your statement, but you said this on this thread, not in May."

What I did is correct the misleading "Rents Continue to Rise" post by petrfitz and others, from The Real Deal - a real-estate website - which took a small subset of rents from TREGNY and deceitfully extrapolated it to the entire market. I did it by publishing not only what the underlying TREGNY report actually said, but by publishing which rents went up and which went down. In all, the rental market was flat.

"You continue to post bad news and discredit anything positive."

Untrue. You consider "positive" to be whatever will support unrealistic property prices. I consider "positive" to be anything that brings prices back to the historical norm with respect to rents and income. In that regard I am in line with every economist and commentator I have seen or read, all of whom believe that for the economy to right itself housing must correct.

"There are some positive and less negative developments occurring on a daily basis."

You will note that I was the one who said I didn't think we were in a recession, from very early on in the year (though my take on that has changed since June). I was the one who said I thought we'd hit a market bottom after BSC (though I was wrong). I was the one who said that the international markets were fine (though they are showing signs of inflation, but continue to be oversold in my opinion). I was the one who said that inflation wasn't a problem because it would fall when imputed rents (40% of the CPI) fell (though I said that when oil was at $100 a barrel).

So Juiceman, you are ENTIRELY wrong about what I've ever said. You have a selective memory about what I've said, and, more especially, what you believe to be positive I believe to be negative.

The difference between you and me is that you believe a housing correction to be a bad thing; I believe it to be a good thing, one that will benefit many more people than it will hurt by making housing more affordable. It will make NYC a better place to live. George W. was right - Wall Street got drunk, now they're paying for it with a hangover.

"You consider "positive" to be whatever will support unrealistic property prices."

"The difference between you and me is that you believe a housing correction to be a bad thing; I believe it to be a good thing"

Both of those statements are untrue. What I want is an accurate picture of what is happening so I can make good decisions. I don't believe you paint an accurate picture of where we are (24x) or where we are going (12x), however I do agree with you (for the most part) on the constructs and methods you use to look at the problem.

> Eddie, I don't think you can assume the relationship of bonuses as a
> percent of gross revenue will hold up.

I don't actually disagree.... but that would mean it LOWERING. Meaning bonuses will be cut even more.

> My sense is that the Wall Street firms aren't cutting people as deeply
> as in the last recession (2002-03), but are cutting perks and bonuses.

Nt quite sure where you're getting that from... I think its going to be both.
But, on the first part, I think the announced totals are already more than 2002-2003 ever saw. And, further are expected. Granted, I guess it depends on whose numbers you're looking at.

> Eddie - sorry, I re-read your post. I'm basically agreeing with you.

I think so too. In the end, layoffs are bad enough, but bonuses are obviously the single biggest factor driving NYC prices, and they're obviously going down.

"I do agree with you (for the most part) on the constructs and methods you use to look at the problem."

Well I'm glad about that. I've made my prediction. I may be wrong. This may play out like the 1988-1998 NYC housing depression, where prices fell 20% in nominal terms over 10 years, but more like 40% adjusted for inflation.

I don't think that will happen this time, however, because there is massive new inventory coming online, and it must be sold or rented. Seems like it's not selling. Listing prices are falling. 30-year fixed jumbo mortgages now average over 8%; Chase quotes an APR of 7.69% on an $800,000 30-year fixed, up a full percentage point from a few weeks ago, and the loans are more difficult to get. Wall Street is reeling, and is about to be reregulated. The cowboy days are over. So I don't understand that if the 2 principal components of real estate prices - incomes and leverage - are working against housing prices, how anybody can say that those prices will do anything but fall.

I just don't understand it.

RE usually follows the pattern of short term smaller loss, and then the extended flat (which as you point out, is a loss in real terms). I think its usually the latter that hurts most...