New theory: As the stock market continues to go down, down, down, Manhattan’s apartment vacancy rate will go up, up, up. Back in August, before Lehman Brothers imploded, the vacancy rate was 1.39 percent in Manhattan, according to statistics from Citi Habitats. Their February report, available here (PDF), indicates a 2.46 percent vacancy rate, considerably higher than January’s 2.24 percent rate and exponentially higher than last February’s rate of 1.31 percent.
Oh, and by the way, the February numbers are the highest on record. That’s not terribly surprising since the numbers on CitiHabitats’ website only go back to 2007.
Still, the question now is how far the numbers are going to climb. If the stock of idle apartments continues to tick ever upwards, landlords will be forced to slash their rents just to keep apace with the slackening demand. We’ve already seen landlords offer concession after concession in order to get their apartments occupied, but steeper cuts in asking rents may be in order. Since August, the average Manhattan-wide rents for studios, one-bedroom, two-bedroom and three-bedroom apartments have fallen by $155, $263, $238 and $467, respectively. While the yearly savings add up to a nice chunk of disposable income, it’s not a huge shift.
So how much further are rents going to fall? Ask Mr. Dow Jones.