- Inventory of empty rental apartments in Manhattan jumps to +15,000 in August
- +15,000 empty rental units in August 2020 nearly tripled last year’s numbers
- Hope for rebound in 2020 appears dim
According to industry experts, the best measure of Manhattan’s overall housing market strength is the city’s rental market. Why? In Manhattan, rental apartments account for 75% of apartments and rental apartments react more quickly to demand than the sales market.
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If the industry experts are right, Manhattan’s housing market is in bad shape.
A new report from Douglas Elliman and Miller Samuel indicates there were more than 15,000 empty rental apartments in Manhattan this August. In August 2019, Manhattan had 5,600 empty rental apartments…this +15,000 number is nearly triple that of last year and the largest number of empty rental apartments ever noted since data for this market segment began being collected some 14 years ago.
In addition to record empty rental apartments, the median rental price fell -4% in August, not a far enough decline to tempt renters to sign on the dotted line. The average rental price for a two-bedroom unit in Manhattan came in at $4,756/month. Average rental prices for studios fell -9% to $2,573 and average prices for one-bedroom units fell -5% to $3,445.
With migration from the city to the suburbs largely fueled by the COVID pandemic that hit NYC hard, Jonathan Miller, CEO of Miller Samuel, said, “The rental market (in Manhattan) is weak and getting weaker. The first-time buyers in outlying areas are largely coming from the Manhattan rental market.”
This latest report on Manhattan rental apartments also indicates that more landlords than ever were offering potential new tenants concessions such as 1.9 months of free rent on top of rental price declines.
Of course, smaller landlords, such as mom and pop enterprises, are and will be hardest hit by this large number of empty rental apartments. Smaller landlords have smaller pockets of cash with which to pay mortgages and property taxes for their rental buildings without taking in rental revenue.
Miller verified this reality by saying, “Where you are already seeing stress on landlords is on the low end of the price spectrum. You’re clearly seeing weakness in the smaller end of the rental market.”
Thanks to CNBC.