Stephen Maycock, a senior vice president at DJK Residential, has a three-bedroom apartment available, a "good family apartment" in the West 60s. Last year, it rented for $6,500 per month. This year, the landlord is asking $6,250. Three or four offers have come in, all of them demanding a month’s free rent, broker’s fees paid by the owner – and none of them over $6,000.
If such reductions continue, how long will it be before New Yorkers can rent a decent apartment in Manhattan for $1,000 a month?
Brokers are loath to make predictions, of course. One laughed at the very idea. Another suggested it might get there if the recession lasts two or three years. And another offered that he had seen a small studio in the East 70s for $1,350 and that’s about as good as it gets.
But consider the numbers. Manhattan rents are, on the whole, declining. And they’re declining now more steeply than in past months.
Overall, the average rent for a studio is down almost $100 since October, to $1,808 per month, according to market reports from Citi Habitats. Data compiled by the Real Estate Group New York show that the average rent has decreased 8.67 percent in doorman studios between this November and the same period a year ago. In non-doorman studios, the average rent is down 2.43 percent, with units in the East Village going for $1,922 – the lowest since TREGNY began releasing numbers. One-bedrooms show a similar, albeit less extreme, trend downward, with a 3.12 percent decrease between November 2007 and last month, according to TREGNY. Vacancy rates hit 2.04 percent Manhattan-wide this November, according to Citi Habitats.
But Daniel Baum, TREGNY’s chief operating officer, noted that the figures don’t tell the whole story. For one thing, new developments skew the averages. Incentives, such as free rent, are not factored in. So the drops are likely more vertical than the numbers show.
"It’s fair to say that there does not appear to be any rational reason for why you would think the rental market is going to rebound overnight," he said. "It’s pretty clear that things are much weaker today than things have been a year or two ago."
For the most part, landlords continue to lure tenants with concessions, rather than locking them into leases at lower rates. (Mr. Maycock also heard of an existing tenant who demanded the same freebies as renters who had just moved in, as a kind of "preferred customer" deal. It didn’t work.) But the economy is not going to turn around in the next few months. We have yet to see the economic downturn’s full effects.
"[Landlords] will be aggressive during the first quarter, over the new year and into January and February," Mr. Maycock said, "and I think then they’re going to take another look at the numbers. There’s still a lag effect in terms of job losses."
ALTHOUGH THE DIP IN Manhattan rents is partly seasonal, next year’s annual pickup may be considerably smaller. For one thing, the crop of new hires who would typically fill the vacancies may not arrive. Mr. Baum recalled the months after September 11: "What was interesting in that respect was that we actually saw a rebound from that quite rapidly," he said, since residents displaced from Lower Manhattan moved uptown. "That’s not the case right now."
So where would demand come from?
Perhaps the outer boroughs. It’s too early to tell how many Brooklynites will trickle back to the city if prices come down, but it seems obvious: The prospect of affording non-cardboard-box shelter in Manhattan is decidedly alluring.
"There are people who are going to kick the tires," said Gary Malin, president of Citi Habitats, "and put pen to paper, and see if the financial circumstances make sense to them to make the move."
On the other hand, there are neighborhoods outside Manhattan with ardent fan bases, people who prefer Brooklyn or Queens or the suburbs. Mr. Maycock has yet to work with any "transferees from Brooklyn," and he thinks that rents in Manhattan would have to come down 20 or 30 percent before a critical mass of renters would hop the river. Which means less demand, more supply, lower rents and another step closer to that elusive $1,000 apartment.
Regardless, the make-a-decision-now-or-you’ll-lose-the-deal atmosphere is gone. Brokers are working harder, even though "the phones are ringing," said Brian Stern, managing director of Bond New York.
"When you’re doing a lot of volume," Mr. Maycock said, "it’s just normal to have deals fall through, just pass by the wayside because that’s just the nature of the business. So I think there’s a sense now that you put 100 percent of your concentration behind every deal, so you make sure nothing untoward happens to it."