http://www.nypost.com/seven/01082009/realestate/of_the_wall_149135.htm How weak is the Manhattan rental market these days? Well, if things keep going the way they have been, you might want to slip your next rent check inside a sympathy card before giving it to your landlord. According to numbers from the Real Estate Group New York, rents are down across the board in Manhattan. Non-doorman studios,... [more]
http://www.nypost.com/seven/01082009/realestate/of_the_wall_149135.htm
How weak is the Manhattan rental market these days? Well, if things keep going the way they have been, you might want to slip your next rent check inside a sympathy card before giving it to your landlord.
According to numbers from the Real Estate Group New York, rents are down across the board in Manhattan. Non-doorman studios, one-bedrooms and two-bedrooms and doorman studios and one-bedrooms are all renting for less than they were at this time last year. Only doorman two-bedrooms saw prices rise compared to those of the previous year, and the average rent increase was less than 1 percent.
Bond New York principal Bruno Ricciotti says that since the Wall Street crisis came to a head in September, he's seen rents for some units fall 10 to 30 percent.
"They're the steepest price drops that I've seen in the 12 years that I've been in the business," he says.
And typically, the city's sales and rental markets haven't seen prices fall simultaneously, as they have been, notes Gary Malin, president of Citi Habitats.
"Historically, when the sales market hits a bump in the road, the rental market is the prime beneficiary," he says. "But [rental] prices are certainly coming down."
And signs of the market's softness don't end at falling prices, either. In fact, says Fritz Frigan, executive director of sales and leasing for Halstead Property, an even better measure of the rental scene's health is the number of buildings that are offering to cover broker's fees.
"Most landlords try not to lower rent because then you're renewing the next year from a lower base," Frigan says.
But in hard times, many will pay a new tenant's broker's fee as a way of luring them to their building. In January 2008, 90 of the rental properties represented by Halstead were covering brokers' fees. By July, that number was up to 400. By November, it was at 1,300.
And, says Real Estate Group COO Daniel Baum, the real rental downturn might just be beginning. Despite all the talk of layoffs, recent job losses are still working their way through the market. (City Comptroller William Thompson has predicted 170,000 lost jobs in the city through 2010.)
The majority of New York's renters start and end their leases in the late spring and summer, Baum notes, adding, "My guess is that you're going to see a lot more inventory coming on the market then."
There are no doubt deals to be had right now, though. In fact, says Ricciotti, New York renters have begun to take advantage of their strange new position in the catbird seat.
"I'm seeing a segment of the market I haven't seen since 2001, 2002," he says. "People who are moving not because they have to, but because they think they can get a deal."
So where are the bargain-hunters heading? According to Daniel Hedaya, director of leasing at Platinum Properties, pretty much everywhere. Even buildings in prime rental neighborhoods like Chelsea and Murray Hill are offering concessions these days. But if you're looking for the most bang for your buck, you might want look in areas like the Financial District, where an excess of inventory has led landlords to offer significant incentives.
"The majority of buildings in the Financial District are offering the broker's fee plus one month of free rent to tenants," says Hedaya.
And some area buildings - including the Philippe Starck-designed Dwell building at 95 Wall St. - are offering up to three months of free rent, Hedaya says. Others are trying out incentives like waived security deposits or $500 American Express gift cards.
High inventory could also send rents lower in Midtown West, where buildings like the Archstone Clinton have added hundreds of units to the neighborhood. In-progress developments like the 1,359-unit Silver Towers at 600 42nd St. are slated to add thousands more.
"That's an area [Midtown West] that's about to come onto the market hard in the next six or seven months," Hedaya says.
It's also an area, Frigan says, that's relatively remote and lacking in services - factors that make it more susceptible to a downturn.
Similarly susceptible are fringe neighborhoods like Harlem and the outermost reaches of the Upper East and Upper West sides. Harlem apartments, in fact, are already a relative bargain, with non-doorman studios averaging under $1,300 a month, according to numbers from the Real Estate Group New York.
And, as Malin notes, the far Upper East Side's lack of transportation and abundance of amenity-free walk-ups make it a perennial favorite of those looking for a deal.
DJK Residential broker Leslie Lazarus also suggests bargain-hunters concentrate their searches on larger rental developments.
"That's where my clients are seeing the best values right now," she says. "They typically have more flexibility [than an individual landlord], and they definitely have more inventory right now."
"I can't say rents have come down so much that Manhattan has become so affordable," Baum says, sounding a note of caution lest lessees get caught up in their own brand of "irrational exuberance."
All the same, though, given the current state of things, every little bit helps.
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Response by nyc10022
about 17 years ago
Posts: 9868
Member since: Aug 2008
wow, not even a whisper on this one!
seriously guys, what's going on? Are we now immune to market decline info?
I would have expected this to go 3 pages...
;-)
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Response by citi10009
about 17 years ago
Posts: 14
Member since: Sep 2008
Does anyone have any color on the situation in peter cooper village / stuy town?
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Response by serge07
about 17 years ago
Posts: 334
Member since: Aug 2008
Informative article.
That's about how I picture the longer term developing. Increasing inventory that not many wish to sell at this time in the "hope" the future will bring improved market conditions. Owners/developers turn to the rental option to fill their cash flow void which leads to increased price/terms competition. This would imply that the RE market is currently in the "hope" stage and indicative (at least to yours truly) the BEAR has a ways to go in the current market cycle. Someone wake me up when the despair phase of the RE cycle in well in progress.
In the mean time, take what the market gives you which is to rent and keep collecting interest on a future down payment.
I agree that the City may indeed experience population losses in the coming months and perhaps years given the across the board significant contraction of employment, mergers and downright liquidations. In my view, this scenario has a ways to fully play itself out to a conclusion that is uncertain at best.
Not a pretty picture the article paints but it is what it is.
Thanks for the read!
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Response by aboutready
about 17 years ago
Posts: 16354
Member since: Oct 2007
citi10009 - renewal or new leases?
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Response by julia
about 17 years ago
Posts: 2841
Member since: Feb 2007
I completely agree with this...landlords are giving one+ free months, plus they're paying broker's fee.
Stuy Town is giving one month free but continue to refuse to lower the base rent of $3100 for a one bedroom in stuy town..location does lower the price if you want to be on avenue c and 14th street they'll lower it to $2900
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Response by ccdevi
about 17 years ago
Posts: 861
Member since: Apr 2007
another thread where nyc responds to his own post complaining that no one cares, have you no shame?
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Response by julia
about 17 years ago
Posts: 2841
Member since: Feb 2007
why do you care about nyc responding to his own post..remember free speech!!
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Response by stevejhx
about 17 years ago
Posts: 12656
Member since: Feb 2008
I expect rents to drop another 30% - 50% in the next 12 months. The hardest hit is going to be Archstone, a leveraged buyout owned by Lehman. They have the highest vacancies because they have the highest rents. Cooper Village / Stuyveysant Town is going to file for bankruptcy.
Look for luxury 2-bedroom 2-bath in the $3,000 - $3,500 range this time next year.
One more reason not to buy.
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Response by ccdevi
about 17 years ago
Posts: 861
Member since: Apr 2007
"remember free speech"
ugh, pet peeve, hate when people invoke this fundamental and very important right without understanding what they are talking about
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Response by nyc10022
about 17 years ago
Posts: 9868
Member since: Aug 2008
ccdevi, why are you wound so tight?
Other folks clearly found the article informative. Why are you so adamant that they shouldn't?
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Response by stevejhx
about 17 years ago
Posts: 12656
Member since: Feb 2008
"hate when people invoke this fundamental and very important right without understanding what they are talking about"
Are you directing that comment at yourself, ccd?
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Response by w67thstreet
about 17 years ago
Posts: 9003
Member since: Dec 2008
Yo all... just getting up....
If you are a NYC RE owner... this article should scare the diarrhea right out of you. The is the key quote and the mantra of every living RE borker out there for the last 10 years :
"Historically, when the sales market hits a bump in the road, the rental market is the prime beneficiary," he says. "But [rental] prices are certainly coming down."
No where to hide... no where to hide.... when they turned on the lights... lots of little roaches r running for the baseboards... kill them b/f they get there :)
Just read my post... i'm in prime form... :)
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Response by ccdevi
about 17 years ago
Posts: 861
Member since: Apr 2007
"Why are you so adamant that they shouldn't?"
where did I say that? I'm just making fun of you because I think its pathetic that you start threads and then check back and are upset no one cared enough to respond, so you respond to your own post. Thats all.
"Are you directing that comment at yourself, ccd?"
well did I invoke the right of freedom of speech? no. so I think we can safely assume I was not directing the comment at myself. thanks though.
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Response by stevejhx
about 17 years ago
Posts: 12656
Member since: Feb 2008
"I think we can safely assume I was not directing the comment at myself"
No, I didn't think so. Self-reflection was never one of your fortés.
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Response by nyc10022
about 17 years ago
Posts: 9868
Member since: Aug 2008
> Are you directing that comment at yourself, ccd?
LOL.
It is funny how many bitter bulls have become hypocritical message board cops these days...
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Response by stevejhx
about 17 years ago
Posts: 12656
Member since: Feb 2008
It didn't have to be this bad:
Dimon, speaking at a health-care conference in San Francisco, said the financial system went into “cardiac arrest” in September. He said his New York-based bank’s earnings have been “terrible.”
“The system went into cardiac arrest,” Dimon said, citing the bankruptcy of Lehman Brothers Holdings Inc., and the government takeover of Fannie Mae and Freddie Mac.
But the damage is done, and severely to Manhattan real estate. Let's face it, as I predicted months ago Citigroup is going to be disassembled. Combining the Morgan Stanley and Smith Barney will mean the elimination of thousands of back office and support jobs, and probably 10% - 20% of underperforming brokers.
More bad news. Rents are going to collapse.
You heard it from me a year ago.
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Response by tech_guy
about 17 years ago
Posts: 967
Member since: Aug 2008
"ugh, pet peeve, hate when people invoke this fundamental and very important right without understanding what they are talking about"
Me too. Such people do the right a huge disservice.
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Response by nyc10022
about 17 years ago
Posts: 9868
Member since: Aug 2008
> You heard it from me a year ago.
True, but by your logic... because you didn't know Lehman would go under, your original assessment was incorrection. Facts changed after your guess. So it isn't meaningful now...
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Response by PMG
about 17 years ago
Posts: 1322
Member since: Jan 2008
I can see where a lot of owners should be nervous, because it truly looks like rental rates are going to crack. I've been watching a failed conversion, and they cannot even rent newly renovated apartments on the UWS.
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Response by nyc10022
about 17 years ago
Posts: 9868
Member since: Aug 2008
The market reports have noted that this the rare exception of a time when both prices and rental rates are dropping. I would not be surprised if they do in fact crater along with prices.
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Response by hejiranyc
about 17 years ago
Posts: 255
Member since: Jan 2009
It looks like my building in the West Village has "cracked" too. For the past year or so, the management company has been on an aggressive campaign to price existing tenants out of their apartments so that they can renovate them and flip them back onto the market at a 50% higher rent. It used to be that I would walk out in the morning and be greeted by a line of Hispanic day-laborers brought in to do the renovation work. Well, the day-laborers are now no longer there. Instead there are 14 empty apartments in various stages of renovation and asking rents have been cut practically down to the rate for unrenovated units. I guess they used to think that they could hold out forever to land the next sucker willing to pay 50% above the market for a pretty unexceptional apartment in a nice location. Instead, they are bleeding arguably $60K+ per month in missing rent checks when they could have kept the apartments occupied all this time without having to pay for costly renovations. And this was all due to hubris and greed. Karma is a beotch, ain't it?
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Response by xellam
about 17 years ago
Posts: 133
Member since: Sep 2008
I know, it's 15 CPW, but still...this has got to sting.
Mr. Berman bought it for 6.7M on October 15, and put it on the rental market for 40k per month on October 21. Now it's down to 27k, and still no takers. IMO, it's a beautiful place, even if it is on the 3rd floor so has no real views.
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Response by nyc10022
about 17 years ago
Posts: 9868
Member since: Aug 2008
Interestingly enough, it went from a 14x rent to buy ratio to a 21x.
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Response by specialkay1
about 17 years ago
Posts: 12
Member since: Dec 2008
The same floorplan of an Archstone apartment we rented in July at West End and 64th was listed on the company's website at a 19% discount to what we are paying.
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Response by PMG
about 17 years ago
Posts: 1322
Member since: Jan 2008
By my estimate that 15 CPW offering still yields 4% after expenses, on a cash purchase price of $6.7 million. That exceeds most CD yields. It's a safe building, so that may turn out fine for a wealthy investor, provided the apartment actually rents for $27,000 per month. The problem I see with 15 CPW is that there are a lot of apartments for rent for a super luxury building. Also, there are 38 apartments "in contract" which suggests shadow supply on top of the 11 apartments for sale today.
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Response by julia
about 17 years ago
Posts: 2841
Member since: Feb 2007
it will be a clear indication of the rental market if stuyvesant town/peter cooper reduces their prices by 25%.
We looked at this one. Beautiful apartment, great building, great area. On the small side, for what we wanted, and in general. Started at $6300 asking, was $5850 when we looked at it. At the time, my wife said it was too much, why are we even looking. I told her they were just kidding about the price. Down to $5000 today, which makes it look like a decent deal, especially since you can probably negotiate further down.
With the current asks, it's a 26x rent to buy ratio. Hmm... worse, maintenance is very high for an apartment of this size, making the rent vs. buy even more out of whack. In fact, maintenance is currently more than half of what it costs to rent it. Not good.
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Response by nyc10023
about 17 years ago
Posts: 7614
Member since: Nov 2008
FYI, similarly-sized apartments at 45W60 (Glenwood bldg) were renting around $5k in 99/00. Finishes were not as nice. Also, I think the owners will cough up the broker's fee.
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Response by madrid4sale
about 17 years ago
Posts: 20
Member since: Jan 2009
Murray Hill, prices have seen a sharp deline. Financial district - Forget about it...they are giving away their mothers to bring attention to thier units along with the decrease in rents.
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Response by anonymous
about 17 years ago
With the current asks, it's a 26x rent to buy ratio ...
Proper way to think about a rent to buy ratio is to recognize that the buyer has monthly costs.
So subtract the monthly costs from the monthly rent and use that (*12) when calculating the multiple.
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Response by anonymous
about 17 years ago
So above example, $5K in rent, $2500 in maintenance - let's call it $2000 net in maintenance after the tax deduction of any mortgage interest paid there or any real estate taxes included in it.
5K-2K = 3K * 12months = $36K ...
And the apartment is listed at $1.58MM so $1.58M / 36K a whopping 44x
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Response by lookingat89murray
about 17 years ago
Posts: 3
Member since: Jan 2009
Has anyone looked at the 89 Murray Rental Building? It is attached also to 101 Warren with the WHole Foods and Barnes & Noble. Thank you
wow, not even a whisper on this one!
seriously guys, what's going on? Are we now immune to market decline info?
I would have expected this to go 3 pages...
;-)
Does anyone have any color on the situation in peter cooper village / stuy town?
Informative article.
That's about how I picture the longer term developing. Increasing inventory that not many wish to sell at this time in the "hope" the future will bring improved market conditions. Owners/developers turn to the rental option to fill their cash flow void which leads to increased price/terms competition. This would imply that the RE market is currently in the "hope" stage and indicative (at least to yours truly) the BEAR has a ways to go in the current market cycle. Someone wake me up when the despair phase of the RE cycle in well in progress.
In the mean time, take what the market gives you which is to rent and keep collecting interest on a future down payment.
I agree that the City may indeed experience population losses in the coming months and perhaps years given the across the board significant contraction of employment, mergers and downright liquidations. In my view, this scenario has a ways to fully play itself out to a conclusion that is uncertain at best.
Not a pretty picture the article paints but it is what it is.
Thanks for the read!
citi10009 - renewal or new leases?
I completely agree with this...landlords are giving one+ free months, plus they're paying broker's fee.
Stuy Town is giving one month free but continue to refuse to lower the base rent of $3100 for a one bedroom in stuy town..location does lower the price if you want to be on avenue c and 14th street they'll lower it to $2900
another thread where nyc responds to his own post complaining that no one cares, have you no shame?
why do you care about nyc responding to his own post..remember free speech!!
I expect rents to drop another 30% - 50% in the next 12 months. The hardest hit is going to be Archstone, a leveraged buyout owned by Lehman. They have the highest vacancies because they have the highest rents. Cooper Village / Stuyveysant Town is going to file for bankruptcy.
Look for luxury 2-bedroom 2-bath in the $3,000 - $3,500 range this time next year.
One more reason not to buy.
"remember free speech"
ugh, pet peeve, hate when people invoke this fundamental and very important right without understanding what they are talking about
ccdevi, why are you wound so tight?
Other folks clearly found the article informative. Why are you so adamant that they shouldn't?
"hate when people invoke this fundamental and very important right without understanding what they are talking about"
Are you directing that comment at yourself, ccd?
Yo all... just getting up....
If you are a NYC RE owner... this article should scare the diarrhea right out of you. The is the key quote and the mantra of every living RE borker out there for the last 10 years :
"Historically, when the sales market hits a bump in the road, the rental market is the prime beneficiary," he says. "But [rental] prices are certainly coming down."
No where to hide... no where to hide.... when they turned on the lights... lots of little roaches r running for the baseboards... kill them b/f they get there :)
Just read my post... i'm in prime form... :)
"Why are you so adamant that they shouldn't?"
where did I say that? I'm just making fun of you because I think its pathetic that you start threads and then check back and are upset no one cared enough to respond, so you respond to your own post. Thats all.
"Are you directing that comment at yourself, ccd?"
well did I invoke the right of freedom of speech? no. so I think we can safely assume I was not directing the comment at myself. thanks though.
"I think we can safely assume I was not directing the comment at myself"
No, I didn't think so. Self-reflection was never one of your fortés.
> Are you directing that comment at yourself, ccd?
LOL.
It is funny how many bitter bulls have become hypocritical message board cops these days...
It didn't have to be this bad:
Dimon, speaking at a health-care conference in San Francisco, said the financial system went into “cardiac arrest” in September. He said his New York-based bank’s earnings have been “terrible.”
“The system went into cardiac arrest,” Dimon said, citing the bankruptcy of Lehman Brothers Holdings Inc., and the government takeover of Fannie Mae and Freddie Mac.
http://www.bloomberg.com/apps/news?pid=20601087&sid=alljk.ON8QKU&refer=home
But the damage is done, and severely to Manhattan real estate. Let's face it, as I predicted months ago Citigroup is going to be disassembled. Combining the Morgan Stanley and Smith Barney will mean the elimination of thousands of back office and support jobs, and probably 10% - 20% of underperforming brokers.
More bad news. Rents are going to collapse.
You heard it from me a year ago.
"ugh, pet peeve, hate when people invoke this fundamental and very important right without understanding what they are talking about"
Me too. Such people do the right a huge disservice.
> You heard it from me a year ago.
True, but by your logic... because you didn't know Lehman would go under, your original assessment was incorrection. Facts changed after your guess. So it isn't meaningful now...
I can see where a lot of owners should be nervous, because it truly looks like rental rates are going to crack. I've been watching a failed conversion, and they cannot even rent newly renovated apartments on the UWS.
The market reports have noted that this the rare exception of a time when both prices and rental rates are dropping. I would not be surprised if they do in fact crater along with prices.
It looks like my building in the West Village has "cracked" too. For the past year or so, the management company has been on an aggressive campaign to price existing tenants out of their apartments so that they can renovate them and flip them back onto the market at a 50% higher rent. It used to be that I would walk out in the morning and be greeted by a line of Hispanic day-laborers brought in to do the renovation work. Well, the day-laborers are now no longer there. Instead there are 14 empty apartments in various stages of renovation and asking rents have been cut practically down to the rate for unrenovated units. I guess they used to think that they could hold out forever to land the next sucker willing to pay 50% above the market for a pretty unexceptional apartment in a nice location. Instead, they are bleeding arguably $60K+ per month in missing rent checks when they could have kept the apartments occupied all this time without having to pay for costly renovations. And this was all due to hubris and greed. Karma is a beotch, ain't it?
I know, it's 15 CPW, but still...this has got to sting.
http://manhattan.blockshopper.com/news/story/205420/
http://www.streeteasy.com/nyc/rental/425372-condo-15-central-park-west-lincoln-square-new-york
Mr. Berman bought it for 6.7M on October 15, and put it on the rental market for 40k per month on October 21. Now it's down to 27k, and still no takers. IMO, it's a beautiful place, even if it is on the 3rd floor so has no real views.
Interestingly enough, it went from a 14x rent to buy ratio to a 21x.
The same floorplan of an Archstone apartment we rented in July at West End and 64th was listed on the company's website at a 19% discount to what we are paying.
By my estimate that 15 CPW offering still yields 4% after expenses, on a cash purchase price of $6.7 million. That exceeds most CD yields. It's a safe building, so that may turn out fine for a wealthy investor, provided the apartment actually rents for $27,000 per month. The problem I see with 15 CPW is that there are a lot of apartments for rent for a super luxury building. Also, there are 38 apartments "in contract" which suggests shadow supply on top of the 11 apartments for sale today.
it will be a clear indication of the rental market if stuyvesant town/peter cooper reduces their prices by 25%.
Rockrose is now giving two months free rent.
http://www.streeteasy.com/nyc/rental/416878-coop-61-west-62nd-street-lincoln-square-new-york
We looked at this one. Beautiful apartment, great building, great area. On the small side, for what we wanted, and in general. Started at $6300 asking, was $5850 when we looked at it. At the time, my wife said it was too much, why are we even looking. I told her they were just kidding about the price. Down to $5000 today, which makes it look like a decent deal, especially since you can probably negotiate further down.
The interesting part is that it's also listed for sale.
http://www.streeteasy.com/nyc/sale/351671-coop-61-west-62nd-street-lincoln-square-new-york
With the current asks, it's a 26x rent to buy ratio. Hmm... worse, maintenance is very high for an apartment of this size, making the rent vs. buy even more out of whack. In fact, maintenance is currently more than half of what it costs to rent it. Not good.
FYI, similarly-sized apartments at 45W60 (Glenwood bldg) were renting around $5k in 99/00. Finishes were not as nice. Also, I think the owners will cough up the broker's fee.
Murray Hill, prices have seen a sharp deline. Financial district - Forget about it...they are giving away their mothers to bring attention to thier units along with the decrease in rents.
With the current asks, it's a 26x rent to buy ratio ...
Proper way to think about a rent to buy ratio is to recognize that the buyer has monthly costs.
So subtract the monthly costs from the monthly rent and use that (*12) when calculating the multiple.
So above example, $5K in rent, $2500 in maintenance - let's call it $2000 net in maintenance after the tax deduction of any mortgage interest paid there or any real estate taxes included in it.
5K-2K = 3K * 12months = $36K ...
And the apartment is listed at $1.58MM so $1.58M / 36K a whopping 44x
Has anyone looked at the 89 Murray Rental Building? It is attached also to 101 Warren with the WHole Foods and Barnes & Noble. Thank you
89 Murray Street Rental Property. Concierge.
Apt Size R/B/B Rent UF/F Updated Status Source
VAR-ST STU 2/0/1 $3,100 UF 10/14/2008 POM OLR
VAR-ALC ALC 2.5/0/1 $3,150 UF 7/18/2008 Rented OLR
VAR-1B 1BD 3/1/1 $4,100 UF 10/17/2008 Rented OLR
VAR-C2 CNV2 3.5/2/1 $4,100 UF 12/19/2008 Rented OLR
VAR-2B 2BD 4/2/2 $5,645 UF 10/10/2008 Rented OLR
VAR-3B 3BD 5/3/2 $6,395 UF 9/5/2008 Rented OLR