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(Read more on the multifamily market.)

NEW YORK CITY-After leveling off slightly last month, the Manhattan apartment rental market continues to weaken following this summer’s peak. An analysis of current rental rates found that all average apartment rents throughout the city decreased in October, resuming a correction in the market that started unseasonably in August.

October data released today by the Real Estate Group Inc. in its Manhattan Rental Market Report, a monthly study of apartment rental rates, shows that all average rents decreased this month at the start of the Q4 ’07. This is the first time in 2007 that all average asking rents in Manhattan posted a decline, signifying the continuation of a cooling rental market typical in the fall. Doorman one- and two-bedroom units have registered the most significant decrease, followed by two bedrooms in the non-doorman category. The one bright spot was the studio apartment sector, which remained relatively stable.

“As we enter the fourth quarter, average rents throughout Manhattan resumed their decline, showing the continuation of a weakening rental market,” notes Daniel Baum, COO of the Real Estate Group. “Although landlords attempt to minimize projected vacancies by offering discounts and incentives to entice potential tenants, it appears that their efforts simply aren’t enough to avoid the market downturn that is historically typical in the fall. This downturn was expected, firstly because of the seasonable rental cycle, but more importantly because of the decline that we saw in August, which foreshadowed an aggressive cooling ahead.”

Baum tells GlobeSt.com that he thinks we will see a continued downtrend through the fall, and into the winter, but notes that he does not expect the market to fall too drastically. “I would look for price increasing again as we get through the cold months and it begins to warm as we do most years,” he says.

In an effort to keep rent rolls up and minimize vacancies, landlords are offering unconventional incentives ranging from free iPods and digital cameras at lease signing to overseas airline tickets and all-expense paid trips for brokers who close the most deals at Peter Cooper Village/Stuyvesant Town. Landlords have also increased offers to pay the tenant’s one month’s rent or their agent’s brokerage fee.

The Manhattan Rental Market Report is specifically compiled to track the price path of average asking rents throughout Manhattan’s 14 neighborhoods below 100th Street, omitting ultra-luxury property to obtain a true monthly average. The data is sorted by service level–doorman vs. non-doorman–neighborhood and bedroom size. The Manhattan Rental Market Report is based on data cross-sectioned from over 10,000 currently available listings aggregated from the Tregny proprietary database and sampled from a specific mid-month point to record current rental rates offered by landlords that month.

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