NYC rents slip again as listings for available apartments pile up

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  • Manhattan median rent in October was $4,195, down 3.6 percent compared to September
  • Apartment listings were up over 30 percent last month, creating competition for owners

From Brickunderground.com, Jennifer White Karp, November 9, 2023

There’s some good news for apartment hunters: A lot more rentals were available last month in New York City compared to a year ago, a surge in inventory that caused rents to drop just slightly. If you’re looking for a new rental, this is likely to be the trend going forward.

It’s largely due to the calendar —the market has passed the peak summer rental season. Manhattan median rent for new leases in October was $4,195, down 3.6 percent compared to September, according to the latest edition of the Elliman Report, which looked at the Manhattan, Brooklyn, and Queens rental markets. There were larger monthly drops in median rent for Brooklyn (5.7 percent) and Queens (9.4 percent).

Rents are likely to remain flat with only small dips for the foreseeable future, says Jonathan Miller, president and CEO of appraisal firm Miller Samuel and author of the report. Don’t expect a sharp decrease—because that’s not how the NYC rental market works.

Even though rents were down on a monthly basis in Manhattan, they were still up 20 percent from the pre-pandemic era. (Manhattan’s median rent in October was also 4.6 percent higher than a year ago.)

Far fewer Manhattan renters signed new leases in October compared to the prior year, an indication that more renters are renewing their leases, which has been a pattern for the past four months. Lease signings dropped 31.3 percent compared to October 2022. Lease signings were also down 8.7 percent compared to the previous month.

Manhattan vacancy’s rate fell below 3 percent just one month after hitting that peak.

Increasing listings

The other part of this tale is rising inventory, which makes more competition for landlords and keeps them from raising rents, at least in the short term. Compared to a year ago, Manhattan apartment listings were up 31.3 percent last month.

Miller says inventory has been rising for the past six months but points out the market doesn’t have a glut like it did during the depths of the pandemic, when the number of available listings was triple what’s available in Manhattan now.

“Inventory is clearly up now but still significantly below the surplus we saw in 2021,” Miller says.

The Corcoran Group also released Manhattan and Brooklyn rental market reports for October. Gary Malin, chief operating officer at The Corcoran Group, notes that a decline in leasing is typical for this time of year, but the slowdown has reached Manhattan luxury rentals. These renters are not usually as price sensitive, he says.

Owners of luxury apartments lowered rents for new leases as a result, “the first pricing decline for doorman [rentals] in over two years,” Malin says.

National Association of Realtors and Class-Action Lawsuit over Commissions

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From Neil B. Garfinkel, REBNY Broker Counsel•

Two multi-billion dollars federal lawsuits are currently being litigated (Moehrl, et al. v. NAR, et al. and Burnett (Sitzer), et al. V. NAR, et al.) that could greatly affect the way NAR members do business. The trial in the Burnett case started this week, and involves the four NAR-affiliated MLSs in Missouri, while the Moehrl case, pending in Chicago, is slated to go to trial next year and involves 20 NAR-affiliated MLSs in numerous states. In addition to NAR, four major brokerage firms were named in these suits: Realogy Holdings Corp. n/k/a Anywhere (the parent company of Better Homes and Gardens Real Estate, Century 21, Corcoran, ERA, Coldwell Banker Realty and Sotheby’s International Realty), Home Services of America, Inc., RE/MAX Holdings Inc. and Keller Williams Realty, Inc. 

Specifically, the class plaintiffs claim that certain NAR MLS rules, including the blanket offer of compensation rule, require sellers to make a uniform offer of compensation to buy-side brokers in order to be able to list their properties on multiple listing services (“MLS”) and help to keep commissions high, and reduce the ability to negotiate for lower commissions. The brokerages appear to have been included in these class-actions because they require their agents to be members of the NAR in order to access the MLS’s where their listings were being placed, and also served in high ranking positions at NAR.  The plaintiffs seek damages, and practice changes which will allow for greater negotiation of the commission rate to be paid in a transaction. 

Two of the Brokerage firms, RE/MAX and Anywhere, recently settled with the plaintiffs for $55 and $83.5 million dollars, respectively.  There are other conditions to these settlements involving practice changes that have been proposed and will be implemented following Court approval of the settlements.  The settlements cover both the Burnett and Moehrl lawsuits, and therefore neither RE/MAX nor Anywhere is participating in the Burnett trial.  The lawsuits against NAR and the two other remaining brokerages are ongoing.  We will provide updates as more information becomes available.  

Separate and apart from these lawsuits, members should be aware that REBNY is also working on making changes to the Universal Co-Brokerage Agreement (“UCBA”). This is not as a reaction to the lawsuits but rather these amendments are independently being reviewed in the constant effort to promote transparency and consumer confidence in the residential real estate transaction.

From REBNY

Midtown, Lower Manhattan foot traffic down 33% — one of worst post-COVID rates in US: survey

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By Carl Campanile, NY Post

Published Nov. 5, 2023, 12:33 p.m. ET

Foot traffic in New York City’s business districts is still down 33% from what it was before the COVID-19 pandemic — one of the lowest recovery rates in the country, a new survey reveals.

The University of Toronto’s analysis measured the number of visitors, including shoppers and tourists, plus residents and workers in the so-called “downtown” or business/tourist districts in major cities in the United States and Canada.

Lower Manhattan, including the Wall Street financial district, and Midtown, featuring Times Square, were considered the Big Apple’s “downtown” district for the study.

Researchers measured foot traffic through mobile phone presence, comparing March to mid-June in 2023 to the same period in 2019. 

New York’s 66% recovery rate ranked 54th out of 66 cities surveyed.

Supermarket magnate and radio host John Catsimatidis told The Post on Sunday that workers need to return to the office.

“I’m very concerned about New York City,” he said. “Right now, Manhattan has one nail in the coffin. 

Chart
New York City came in 54th place for downtown recovery out of 66 cities.

“If you impose congestion pricing to enter the business district, you’ll put two nails in the coffin,” he said, referring to the transit plan to charge drivers in certain city zones to try to discourage vehicles. 

“You see nobody walking after dark.”

Democratic city Councilman Keith Powers, who represents Midtown East and West and Times Square, said the city​ needs to create more housing in the ​area to make up for the loss of office space and workers.

“We’ve made steady progress in getting people back to Midtown, but we need to be forward​-thinking about the future and recognize changes to the work​ place​,” he said. “One of our strategies is rezoning Midtown South to incentivize more housing and create a 24/7 neighborhoo​d.​”

Las Vegas ranked first, having 103% of the foot traffic — or 3% more — from pre-pandemic. The gambling mecca was the only city to have more foot traffic than before the COVID-19 outbreak.

A researcher for the study suggested the societal shift to remote office work has caused a dramatic drop in foot traffic in Gotham’s business districts.

“We’ve been tracking since early 2022, and New York was an early comeback story – but then stalled,” said Karen Chapple, director of the University of Toronto’s School of Cities, to The Post. 

Empty city street
A researcher says that New York was an early comeback story after the lockdown until it stalled.

 “Part of this is due to commercial office tenants gradually giving up their leases,” she said.

The researcher did note that unlike earlier studies, her project excluded Hudson Yards because it is not traditionally considered part of Midtown.

Other major cities that recovered most or considerably more foot traffic from the pre-pandemic period compared to the Big Apple include Miami (92%), Nashville (88%), Atlanta (85%), Los Angeles (83%)  and San Diego (80%).

As with New York, there are other cities that have struggled to recover the pre-pandemic density in their central business district.

Chicago’s foot traffic was just 61% of what it was before the pandemic.

The recovery rate for Seattle and Minneapolis was under 60%.

Times Square
Other non-downtown tourist areas in New York have seen a stronger increase in traffice.

High-tech San Francisco’s recovery rate was nearly identical to New York City’s — or 67%.

But the Partnership for the City Of New York, a major business advocacy group, questioned the accuracy of the University of Toronto’s data, citing more recent reports showing a stronger recovery in Manhattan’s key commerce and tourism districts.

Pedestrian foot traffic in Times Square averaged 285,000 in the last week of October 2023, or 80% of the pre-pandemic count of 356,000 during the equivalent week in 2019, it said.

In Downtown Brooklyn, monthly foot traffic reached 75% of pre-pandemic levels in June 2023.

“A lot of our pre-COVID foot traffic involved tourists, and international tourism is still down. We also have by far the densest concentration of office workers, so the hybrid work week has had a bigger impact here, with average weekday presence in the office [having] dropped from 80 % pre-pandemic to just under 60% today,” said Partnership CEO Kathryn Wylde.

Wylde also noted such studies don’t take into account the increase in foot traffic where many office employees now work and shop.

“On the other hand, the city has business districts across the five boroughs which have likely experienced an uptick in foot traffic as a result of work from home,” she said. “So I don’t think [the Big Apple’s] comparison with smaller cities with a single ‘downtown’ is a fair one.”

Broadway sales and attendance were at 85% and 81% of pre-pandemic levels, respectively, during the last week of October, the Partnership added.

Wylde pointed to other promising data points indicating a stronger recovery, noting that New York City’s regional airports had their busiest month in history, with more than 13.3 million passengers served in August and adding that the 192nd new business opened in Times Square in October, surpassing the 179 businesses that closed during the pandemic.

From NY Post.

WeWork Reneotiating Long-Term Leases

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From CNBC:

WeWork was once valued at $47 billion. Now, the office-sharing company is in the throes of the bankruptcy process after its Monday filing. It has about $16 billion in long-term leases, which the company has been renegotiating. (Other than being the latest buzzy company to fall from grace, WeWork has been a key client for commercial real estate landlords already struggling with an inconsistent return-to-office patterns due to Covid.) The move plunged WeWork into a troubling new chapter of its staggeringly sharp and quick downfall, which was already fodder for a miniseries starring Jared Leto as founder Adam Neumann. For his part, Neumann, who stepped down as CEO in 2019 and received hefty payouts, called the bankruptcy filing “disappointing.”

Elliman Residential Report for October 2023

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For Manhattan, the Elliman Report concludes that “While new signed contracts increased year over year for the first time in a year and a half, new listings increased for the first time in sixteen months. All property types saw significant annual gains in newly signed contracts above the $1 million threshold.”

Full report and other real estate information can be found at Elliman.com.

Federal Reserve Interest Rate Decision

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November 01, 2023

Federal Reserve issues FOMC statement

For release at 2:00 p.m. EDT

Recent indicators suggest that economic activity expanded at a strong pace in the third quarter. Job gains have moderated since earlier in the year but remain strong, and the unemployment rate has remained low. Inflation remains elevated.

The U.S. banking system is sound and resilient. Tighter financial and credit conditions for households and businesses are likely to weigh on economic activity, hiring, and inflation. The extent of these effects remains uncertain. The Committee remains highly attentive to inflation risks.

The Committee seeks to achieve maximum employment and inflation at the rate of 2 percent over the longer run. In support of these goals, the Committee decided to maintain the target range for the federal funds rate at 5-1/4 to 5-1/2 percent. The Committee will continue to assess additional information and its implications for monetary policy. In determining the extent of additional policy firming that may be appropriate to return inflation to 2 percent over time, the Committee will take into account the cumulative tightening of monetary policy, the lags with which monetary policy affects economic activity and inflation, and economic and financial developments. In addition, the Committee will continue reducing its holdings of Treasury securities and agency debt and agency mortgage-backed securities, as described in its previously announced plans. The Committee is strongly committed to returning inflation to its 2 percent objective.

In assessing the appropriate stance of monetary policy, the Committee will continue to monitor the implications of incoming information for the economic outlook. The Committee would be prepared to adjust the stance of monetary policy as appropriate if risks emerge that could impede the attainment of the Committee’s goals. The Committee’s assessments will take into account a wide range of information, including readings on labor market conditions, inflation pressures and inflation expectations, and financial and international developments.

Voting for the monetary policy action were Jerome H. Powell, Chair; John C. Williams, Vice Chair; Michael S. Barr; Michelle W. Bowman; Lisa D. Cook; Austan D. Goolsbee; Patrick Harker; Philip N. Jefferson; Neel Kashkari; Adriana D. Kugler; Lorie K. Logan; and Christopher J. Waller.

From FederalReserve.gov