NEW YORK – The number of apartments for rent in Manhattan tripled in September, with nearly 16,000 vacant apartments, according to a new report.
There were 15,963 apartments for rent in September, up from 5,299 the year before, according to data from Douglas Elliman and Miller Samuel. The vacancy rate in Manhattan, which is normally 2% to 3%, is now almost 6%.
With the excess of vacant apartments, landlords are forced to offer ever-increasing incentives and ever-lower rents to attract tenants. Discounts on listings have tripled, to 4.5%, and landlords are offering an average of two months’ rent to new tenants.
Prices are also going down. Median net effective income, which includes concessions, fell 11% to $ 3,036. The big question for New York City, which faces a declining population, higher crime rates and high unemployment, is whether prices can drop enough to lure residents back to the city.
“I don’t think we’re there yet,” said Steven James, president and CEO of Douglas Elliman’s New York City brokerage. “I think we have a little way to go. The consumer knows that the owners are on the ropes and they know they have them. “
Manhattan rents remain high by national standards. The median rent for a one-bedroom apartment in September was $ 3,307, while the rent for a two-bedroom apartment was $ 4,817. The lower end of the market has been hit especially hard, as lower-wage workers in the service and restaurant industries have endured the brunt of the economic pain in New York. Rents for studio apartments are down 14%.
Rents account for two-thirds of apartments in Manhattan, which is the largest rental market in the country. As rents drop and more apartments are left vacant, the pain could begin to cascade down to smaller and less capitalized homeowners, mortgage lenders and banks. It could also start to affect income from property taxes, which is the largest source of income for New York City, since homeowners have no rental income to pay their taxes.
“The chain reaction is going to be tough, especially for new owners who haven’t been through something like this before,” James said.
This article was originally published in English by Robert Frank for our sister network CNBC.com. For more from CNBC go here.