Apartment landlords are struggling in New York.
Michael P. Feldman, CEO of Choice New York Cos., says that rent for New York apartments in the city's prime areas is off 20% to 30%. In some cases, landlords are giving as much as six months off on a 24-month lease.
Things could turn even worse by the holiday season. By November, Feldman expects to be giving four to five months free rent on a one-year lease.
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"When you get into Thanksgiving, Christmas and New Year's, there's less inventory, but the demand really just dips," Feldman says. "Some of that may be mitigated a bit if there are jobs created for the advanced-level positions. It's going to get worse before it gets better."
Rents were only down 8% to 10% earlier in the year, but Feldman says things have gotten progressively worse each month. Eviction moratoriums aren't helping the situation, even if landlords in The Big Apple are accustomed to them.
"We have an eviction moratorium in New York City every single year," Feldman says. "What makes this different is obviously it's due to the apocalypse [COVID-19], and there's no specific end to it."
While Feldman thinks there are legitimate reasons to limit evictions in times of crisis, he contends that the process gives apartment operators "a lever to pull" if a tenant isn't paying rent or is causing a problem, such as violation of a noise ordinance. The eviction mortarium limits the landlord's ability to try to rectify that situation.
"There is no reason anyone needs to pay rent right now," Feldman says. "We are basically one sweeping round of laws away from absolute anarchy, in my opinion. And I'm not an alarmist."
Despite eviction moratoriums, concessions and lots of noise about people leaving New York for the suburbs, Feldman has confidence in the New York market. He thinks the city will overcome COVID and budgetary issues to thrive in the future.
"I think the question is about whether New York will come back or not is evaporating. It's more a question of when and how quickly," Feldman says.
Already, he says it feels "almost like a Renaissance" in areas like Greenwich Village or Soho, though an uptick in COVID cases may threaten that reopening.
But there could be struggles for The Big Apple and other cities in the near term.
"I don't see a total reversal of 300 years of global urbanization happening," Feldman says. "I see a deceleration of urbanization in the short term, especially for some of these supply-constrained cities like New York."
He's confident that once COVID is under control, the city will turn the corner.
"At some point, we're going to have our arms wrapped around this thing," Feldman says. "And most things will go back normal. To me, it is going to look more like the old normal than most people think."
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Leslie Shaver
Les Shaver has been covering commercial and residential real estate for almost 20 years. His work has appeared in Multifamily Executive, Builder, units, Arlington Magazine in addition to GlobeSt.com and Real Estate Forum.
