Rents in America’s Big Apple, according to a real estate appraiser, is starting to drop as NYC landlords offer flexible rental options to persuade tenants to stay.
Months into the coronavirus crisis had left NYC landlords with no choice but to make drastic changes to weather the economic havoc caused by the pandemic.
In a CNBC interview with Jonathan Miller, the CEO of Miller Samuel revealed that rental prices in New York City are likely to drop further as rental activity in the city slowed down amid the global health crisis.
Coronavirus left landlord with no choice
A recent report from real estate appraisers Miller Samuel and Douglas Elliman shows that Manhattan’s new leases have plummeted by 71% in April compared to last year.
In April, the vacancy rate skyrocketed to its highest levels as well in 14 years.
The decline in leases and uptick of empty apartments, according to the report, is largely the result of various factors including job loss and shelter-at-home measures that keep prospective tenants from visiting the site.
With the economic uncertainty the world is facing today, landlords were left with no options but to offer rental concessions than risk apartment vacancy, according to Hal Gavzie, the executive manager of Douglas Elliman.
NYC landlords are now offering flexible renewal options and waiving of security deposits to current and future tenants.
Gavzie also warned the public that, although it is too early to conclude, the situation appears to resemble the 2008 and 2009 financial crisis.
NYC rental concession is only starting
The CEO of UrbanDigs Noah Rosenblatt said that the rental concession—two months free rent, for instance—landlords are providing is only the beginning. He said there are “a lot more perks to come.”
“If you can get two months free at US$3,500 [AU$5,307] a month, your net effective rent goes way down,” he explained.
The real estate listing website Localize.city has also seen a decrease in rent of about 70% before city lockdowns took in effect. For example, a one-bedroom in Brooklyn fell 4.3% with average rents now on $2,700.
It may not be a huge reduction but Localize.city President Steven Kalifowitz said that the downward trending signals that better deals are coming.
“Based on what we’re seeing, and anecdotally what I’m hearing, we should expect more rental price cuts in the future. I expect we will see people either moving to get a better deal on a bigger, better place, or others downsizing to accommodate lower salary expectations.”
In a recent data from another listing site StreetEasy, it also shows that listings offering rental adjustments, like month-to-month or short-term leases, have climbed as much as 70% year-over-year.
It appears that NYC landlords are more than willing to adjust for the benefit of the renters, particularly in these trying times.