‘Year End Reports’ in Rental Market Reports

Year End Manhattan Rental Market Report 2009

We are proud to present The Real Estate Group’s third annual Year End Report, the summation of a year’s worth of data collected from our monthly Manhattan Rental Market Reports. We hope you and these pages useful in determining the rental trends of Manhattan’s major neighborhoods, as well as the overall climate of the Manhattan rental market during the course of 2009.

Manhattan’s rental market opened 2009 with a continuation of the downward trends that began in the fall of 2008. Landlords quickly saw that incentives were needed to decrease inventories and Manhattan rapidly became a no fee market.

Larger landlords who were able to offer concessions and extras like free rent saw their inventories steadily decrease over the year; however, smaller landlords with less price flexibility had more difficulty getting their units rented.

Manhattan’s seasonality trends in 2009 were muted, yet a moderate increase in activity during the summer months helped prices to stabilize and vacancies to decrease. Some landlords tested rent increases and forgoing concessions throughout the summer, but many abandoned these changes as they saw inventory sit vacant during their “peak” rental season. As fall approached, there was hope for a sustained push from renters whose starting dates were moved into the later part of 2009; however, fall and winter came and went with little change. While we expect a slow start to 2010, there is potential for the market to return to stability over the next year. The most important factor for a market improvement is employment, and as it steadily improves, we can expect the rental market to do the same.

Year End Manhattan Rental Market Report 2008

We are proud to present The Real Estate Group’s second annual Year End Report, the summation of our second year’s worth of data collected from our monthly Manhattan Rental Market Reports. We hope you find these pages useful in determining the rental trends of Manhattan’s major neighborhoods, as well as the overall climate of the Manhattan rental market during the course of 2008.

We can all agree that 2008 will be looked upon as the year that Manhattan finally capitulated to the trends that were already plaguing the rest of the nation. While we started the year with high hopes that the market would buck trends and continue its path of relative stability, the Wall Street collapse eventually brought reality to bear.

The uncertainty and job loss from the financial markets finally hit Manhattan’s rental market toward the end of the summer, bringing rising vacancies and tumbling rents. The Manhattan market, that was at one time very much favorable to owners and landlords, turned into an unquestionable renters’ market in a fairly short period.

To the contrary, from a tenant’s standpoint, 2008 may be considered particularly favorable, especially when compared with recent years past. Prices fell in nearly all categories and unit sizes, with the exception of doorman two–bedrooms, and year–over–year comparisons showed decreases in all but non–doorman studios. Moreover, concessions, which have not recently been seen in Manhattan, have become the norm.

Looking ahead, the numbers suggest that renters are taking advantage of the opportunities provided by the downturn, but that concessions alone will not be enough to return Manhattan’s rental market to stability. Realistically speaking, 2009 looks to be a continuation of the downward pressure we have already felt in the fourth quarter of 2008. I strongly recommend that owners and landlords continue to be aggressive in protecting their portfolios from rising vacancies. Offering concessions, paying broker fees and, when necessary, dropping rents will help keep units occupied.

As an entrepreneur, I look at 2009 with hope that the changes the new administration has promised to bring will move us through the downturn quickly, but only time will tell.

Sincerely,

Daniel Baum, C.O.O.
The Real Estate Group

Year End Manhattan Rental Market Report 2007

We are proud to present The Real Estate Group’s inaugural Year-end Report, the summation of a year’s worth of data collected from our monthly Manhattan Rental Market Reports. We hope you find these pages useful in determining the rental trends of Manhattan’s major neighborhoods, as well as the overall climate of the Manhattan rental market during the course of 2007.

In gauging the overall performance of the 2007 Manhattan rental market, we find it necessary to analyze our data from more than one perspective. From a tenant’s standpoint, and using the Rent Stabilization Board’s Guidelines for 2007 as a benchmark (i.e., a 3% increase on a one-year lease), one could argue that the market was favorable, as increases throughout most studied neighborhoods averaged between 2.2-6.5%.

On the other hand, from an owner’s point of view, and based on trends in the timeline from 2002 to the present, 2007 was a “good” growth year, but considerably weaker than ‘06. The one market segment that did show remarkable gains was the non-doorman two-bedroom category, which increased by 12% citywide.

In this time of economic uncertainty, the rental market for 2008 appears to have no clear path. While a good deal of the rental supply disappeared in the last two years thanks to a booming sales market and condo demand, this was already factored into the market when rental prices began to show weakness in the 4th quarter of ‘07. Growing Manhattan unemployment rates, coupled with the ongoing nationwide credit crunch, could easily push the rental side of the market from positive to negative in the New Year.