NYC Rents Fall For First Time In 20 Months As New Development Prices Collapse

Tyler Durden's picture

A flood of new apartments in Manhattan are finally starting to take their toll on a subsection of NYC real estate that had remained quite resilient up until now.  As Bloomberg points out this morning, with rent concessions now being offered on 35% of high-end apartments in the Big Apple, the median rent for non-doormen buildings fell in October for the first time in 20 months.

The median rent in buildings without doormen fell 1.9 percent in October from a year earlier to $2,840. It was the first decline for the category in 20 months, and the biggest since February 2014, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

 

It’s not that tenants were more willing to pay up for pools and yoga rooms. But landlord concessions at some of these fancier buildings -- such as rent-free months and complimentary access to gyms -- have made the properties a compelling, if slightly costlier, option.

 

“A lot of these doormen buildings have a lot of vacancies and they are offering quite a bit of incentives,” said Hal Gavzie, who oversees leasing for Douglas Elliman. “Rental customers are looking for the best deal they can get.”

 

At buildings with doormen, concessions were offered on 35 percent of all new leases signed in October, the second-highest share this year, according to Jonathan Miller, president of Miller Samuel. At non-doorman properties, 20 percent of deals included incentives.

 

“If you’re looking at two apartments,” Miller said, “and one is in a full-service building and one isn’t, and the difference in rent is a hundred bucks after concessions, maybe you go to the doorman building.”

Meanwhile, increasing rent declines come as the purchase market also seemingly softened in Q3 2017 with Douglas Elliman noting an 11.5% plunge in average purchase price per square foot and listing discounts that nearly doubled YoY.

Of course, as we've noted frequently over the past couple of quarters/years, it seems that the inevitable negative consequences of the massive overbuild of new developments in Manhattan are finally starting to take their toll with average new build prices down 27% YoY and 18.3% on a per square foot basis.

Perhaps the efforts of Jimmy McMillan are finally starting to pay off?

Rent is Too High

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cossack55's picture

"Paging Jared.....STAT"

Gap Admirer's picture

"A lot of these doormen buildings have a lot of vacancies..."

Excellent. Now we have places to house all of those displaced Puerto Ricans.

Chris88's picture

Rent is fucking insane here in the financial district (I refuse to call it FiDi like some yuppie douchebag).  I'll tell you one thing, concessions are going up all over the place.  No security deposit, 1 month free, no fee direct rentals for really beautiful buildings with great amenities.  And the buildings keep going up, people don't seem to understand that the projects that were all started years ago are continuing and will keep going even if cap rates blow out.  Absolute shit show here.

Clowns on Acid's picture

Expect a 20 to 30% decrease in high end rentals in NYC over the next 12 months.

Delving Eye's picture

More like FiDough. NYC rents may have dropped a tad, but they are still astronomical. Is being at the center of gravity worth it? I live an hour away and only go to the city for business events. That's enough for me. I don't have the stomach for all that energy.

Chris88's picture

I work long hours as a portfolio manager, I have a 10 minute walk to work.  Time matters, the more time I can spend with my family and friends the happier I am.  When I take into account not just the long days, but the constant dinners and drinks and other client facing "outside" work functions that all occur here in Manhattan, I'd be kind of nuts to not live here.  When I first started to work as an analyst many moons ago, I did the 90 minute commute each day, working 7 - 9 on average with 3 hours total commute time just drained the hell out of me.  If I didn't live here I'd never live in this piece of shit city, my wife and I hate this place but both have good paying jobs we love.  

divingengineer's picture

Well then they won’t be “high end” anymore, will they?
They will Be mid-range.

Nesbiteme's picture

 

As long as we prevent these mother fucking landlords  from filling the gaps with Airbnb or other near hotel approaches...inb4 “BUT THAT'S NOT FREE MARKET....” Shut up! Free market implies a market that is defined. The hotel market is a market it's a defined market and there is a rental market for NYC residents that's another market that we have defined and by the way we also have defined the market for brothels and massage parlors and supermarkets and ...well you get the idea and if you don't SHUT UP! But as long as we don't allow these fucking landlords to fill the gaps with Airbnb prices should be headed much lower.

Mullet Master's picture

I pay 2k a month for a sick place in the Colorado Rockies. 2500 SF - 5 Bedrooms on 5 acres! Fuck Manhattan and all the bullshit libtard aholes!

Joyo Bliss's picture

The commute must be a bitch.

Mullet Master's picture

I pay 2k a month for a sick place in the Colorado Rockies. 2500 SF - 5 Bedrooms on 5 acres! Fuck Manhattan and all the bullshit libtard aholes!

RAT005's picture

Even with 15yr schedules, I don't think I ever had a mortgage over $1,500.  It's been kind of long time to remember.

Silver Savior's picture

Omg. That's so much money I pay $400 and don't even want to pay that. Why do people do that? 

Porous Horace's picture

I saw the headline and was going to make a "the rent is too damn high" joke, but the article beat me to it.

petersl41@gmail.com's picture

Yeah, but Bill Di Blasio is still the mayor.  How bad is that?

Silver Savior's picture

Good! Fuck those real estate assholes. I hope their properties go into foreclosure and they become renters and get their ass handed back to them. I have more respect for shoplifters and bums.

Silver Savior's picture

I have a secret. Less is more!

Drop-Hammer's picture

Oh, the jews will not make as many shekels.  I am all broken up about that.