2009 slid on by, as did rental prices throughout the year.
Non-doorman apartment prices dropped less than 1% over the course of 2009, as compared to a 5.5% decrease during 2008.
Doorman apartment prices dropped around 5.5% for studios and 1-bedrooms, and just about 2% for 2-bedrooms. This compares to a 7% drop for studios, a 5% drop for 1-bedrooms and no change in pricing for 2-bedrooms during 2008.
What’s noteworthy about this? A few things:
- Realize that no rental reports (Tregny’s, Jonathan Miller’s, etc.) can take into account concessions such as free months or paying the broker fee. As such, net-effective rents, particularly during off-season months, are lower than stated … let’s say on average by 7.5% (which is the equivalent of one months’ rent).
- Headlines love to reference crashing rental prices. Based on data collected, we’re talking about a 6% decrease in rents for non-doorman buildings, and a 5-11% decrease in doorman buildings after rental concessions. When you translate percentages into dollars, that’s $150 off a non-doorman $2500 apartment and approximately $350 off a $3500 doorman apartment. Not insignificant, yet far from earth-shattering. Where the true deals come in (20% price discount) is in the off-season concessions of free months OR when a new building just comes online (in this situation you can see 2-3 months of free rent – just beware of next year’s bill.)
- As you can see by the data, doorman buildings have had to lower prices a bit more to lower vacancies. Also keep in mind, however, that such buildings tend to be of higher quality overall, so the higher end of the market has come down the most (supporting our Year of the Condo theory), becoming more accessible to many renters.
- 2-bedrooms have held their own. First, as the family boom continues in the city, more and more families need to upgrade to larger apartments, or at least to those with more space separation. Second, 2-bedrooms are perfect for roommates who can lower their overall rent bill by moving out of their studios into a 2-bedroom. Often times, the living room is further converted to third bedroom for a more intimate living situation.
Looking down the road for 2010, we can expect prices to at least stabilize as we head into the traditionally voluminous summer season, if not even see a seasonal uptick. That said, with new rental inventory coming online from fresh projects or condo rentals, coupled with continued softness in the employment picture … we don’t see any upward momentum to drive overall rents up city-wide anytime soon.
{ 2 comments… read them below or add one }
While one example is not a trend…
For a September 1 ’09 renewal, still arguably peak season, I negotiated my rent down by just over 20% (Upper East Side, Doorman, 1 Bed). And not via free months. Just from good ol’ fashioned negotiating the rent downwards. Of course, I was truly ready to walk. That negotiating position can go a long way.
Knowing that landlords don’t want to carry empty units should be on the back of everyone’s mind. And with the lack of hiring in the industries that support doorman one beds in Manhattan, demand is down a good bit. A unit unrented for 1 month = 8%+ of a year’s rent out the window. Two months down is 16%+ Add the cost to clean the place and possibly paying a broker (because tenants shouldn’t be directly bearing that cost these days) and you realize you have leverage over your landlord!
I think things are worse out there for landlords than the quarterly data shows. Don’t be afraid to ask for what you want when negotiating. You just might get it! After being forced to take on rent increases for the 6 years I have been in the City, what a difference a recession makes!
UES Bed – Thank you for sharing your experience. Further, your calculations are dead on. Only thing is that they assume all landlords are rational or care about these numbers (you’d think they should, right?) If this were the case, there would be no apartments on the market for more than 2 months, and yet so many abound.
To your very point, you need to understand when you’re willing to walk away, and actually do so, if need be. Congratulations on your negotiations!