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Manhattan Apartment Rents Drop as Employers Cut Jobs
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BY John Gittelsohn in New York at johngitt@bloomberg.net.
Sept. 23 (Bloomberg) -- Manhattan apartment rents dropped an average of at least 8 percent in the year’s most active leasing season as Wall Street job cuts and the recession rippled through the economy, real estate broker Citi Habitats said today.
Rents for studio apartments fell 11 percent to an average of $1,763, according to the broker’s data on deals in May through August compared with the same period a year earlier. The cost of a one-bedroom declined 8 percent to an average of $2,425. Two-bedrooms declined 11 percent to $3,421 and three- bedroom units fell 8 percent to $4,633.
Rising unemployment drove rents lower, reversing a four- year streak of increases, New York-based Citi Habitats said. New York City’s jobless rate climbed to 10.3 percent in August from 5.9 percent a year earlier, the state Labor Department reported Sept. 17. About two-thirds of Manhattan’s 3 million residents live in rented homes, according to Census Bureau data.
“We all knew rents had to adjust,” Citi Habitats President Gary Malin said in an interview. “But a lot of people who work in Manhattan have moved back.”
The SoHo/TriBeCa neighborhood was the city’s most expensive, with studio apartments going for an average of $2,157 a month and three-bedrooms costing $7,286.
The survey focused on the months when the most apartments change hands because of school graduations and job relocations. Rents reported are based on signed leases and don’t include discounts that tenants negotiate, such as reduced broker fees or a month’s free rent.
Stable Market
The overall market remains “very stable,” with less than 2 percent of apartments vacant, Malin said.
About half of brokers’ fees were paid by landlords, up from 25 percent to 30 percent in 2008, he estimated. Renters usually pay the fee rather than building owners.
Citi Habitats brokered about 5,700 transactions during the four-months surveyed, up from 4,600 in the same period of 2008. The company handled about 10,700 apartment leases in all of 2008, the most since its founding in 1994.
To contact the reporter on this story: John Gittelsohn in New York at johngitt@bloomberg.net.
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