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New York City

NEW YORK CITY-It seems like the lagging economy and slow job growth figures are putting downward pressure on the Manhattan apartment market. Despite the sagging for-sale market, multifamily properties in the Big Apple aren’t seeing the rent growth that most would have expected, found the Real Estate Group in its most recent Manhattan Rental Market Report.

For its August study, the locally based firm compiled data from more than 10,000 listings for apartments below 155th Street and priced under $10,000. TREG found that average rents in the borough decreased across the board. Studio units in doorman buildings saw rates drop from $2,561 unit July to $2,507 in August, while units in non-doorman buildings saw rents go from $2,115 to $2,100. For one-bedroom units in doorman buildings, the rent went from $3,692 to $3,638 over the month, though non-doorman properties saw a $5 uptick to $2,765 in August. And rents for two-bedroom units in doorman buildings dropped from $5,560 to $5,542, and their non-doorman counterparts saw rents decline from $3,896 in July to $3,844 in August.

Further, August 2008 prices were all lower than the rates landlords were getting 12 months earlier. The largest declines were seen in non-doorman two-bedroom units and doorman studios, by 5% and 4.8%, respectively. Rents for studio units in doorman buildings were also down 2.1% over the year.

Lowering prices isn’t necessarily a bad thing, points out TREG’s COO, Daniel Baum, since lower prices will inevitably help to lower inventories. For instance, he relates, "in Gramercy Park, non-doorman two-bedroom inventories are down and rents continue to decline to their lowest point" since the firm started its reports in January 2007. "In Chelsea and the Upper East Side, however, doorman two-bedroom prices continued to rise, reaching their highest points to date, and those inventories either remained the same or increased. It appears that rents and vacancies are mutually inclusive. Whatever prices do, inventories will follow." Concessions, meanwhile, also continue to be offered.

The fact that inventories are down across Manhattan, says Baum, "indicates that there is still a demand for housing if apartments are priced well. Concessions alone don’t appear to be enough to entice renters. In this deflated market, many Manhattan dwellers are now looking to the outer boroughs, where they might pay the same amount they were formerly paying, but would receive more in return." Landlords in the city, he adds, may have to face more rental rate cuts as the summer ends.

For renters seeking services as well as a peaceful atmosphere, TREG directs them to the Battery Park submarket, where one-bedroom units in doorman buildings are at their second lowest price point since early 2007. Rents declined 1.9% this month to $3,293. Meanwhile, the best rate for highly amenized units in doormen buildings appears to be in the Financial District. Rents there declined 2.1% for studios, 2.6% for one-bedrooms and 2.7% for two-bedrooms from July to August. Not only are the services high at these new developments, but landlords are offering concessions as well. Prices for one-bedroom units in the Lower East Side are also falling, most recently by 5.6% to $3,524 in August. This is a reversal from prior trends, when the rate skyrocketed to $4,000 in May.