Posted by John on January 16, 2001 at 18:15:47:
In Reply to: NY TIMES says Sky-High Rents Are Declining in Manhattan posted by Amazed renter on January 16, 2001 at 08:42:18:
: I guess that they mean only the ones that are in the upper atmosphere... the ones that are still closer to earth are still that high up...
: January 16, 2001
: Sky-High Rents Are Declining in Manhattan
: By TRACIE ROZHON
: Manhattan's skyrocketing apartment rental market has turned around and started drifting back toward earth. For the first time in seven years, many landlords are reducing prices and some are even offering to pay broker fees, allowing tenants to save thousands of dollars.
: Real estate brokers say there are many more apartments languishing in their computers, unrented. And to many of them, the city no longer seems to be immune to the economic slowdown that has been affecting other parts of the country. Vacancies started accumulating in the fall, the brokers say, after the Nasdaq plummeted and dot-coms began failing.
: Right now, agents say, many people who would have been looking for bigger and better apartments are biding their time.
: Even as prices begin to stabilize or drop, rents remain higher than they were two or three years ago.
: But suddenly, "owners will be negotiable," said Ruth McCoy, executive director of Feathered Nest, one of Manhattan's largest rental agencies. Frederick W. Peters, president of Ashforth Warburg Real Estate, agreed. From Park Avenue palazzi to East Village walkup studios, he said, rents are "absolutely more negotiable throughout the marketplace."
: The change in rental prices and negotiability follows a leveling off of co-op and condominium purchase prices reported over the summer. But many agents say the trend is even more pronounced for rentals.
: At the Halstead Property Company, Brian G. Edwards, the director of leasing, said that activity — people looking and renting — has "fallen off fairly severely" in the last six months. "The wheels haven't fallen off the bus," he said of Manhattan's rental market. "But they're pretty squeaky right now."
: Douglas Elliman, a major city brokerage firm, reported that prices for one-bedroom rentals had fallen 10 to 12 percent and that two-bedroom rents were down 8 percent, according to Marge Pearson, the executive in charge of residential rentals at Elliman.
: At Citi Habitats, the city's largest rental agency, one-bedroom apartments that were once $3,300 a month are now listed near $2,700; studios that once brought $2,200 to $2,400 now bring $1,950 to $2,000. The agency has about 5,000 listings, said Andrew S. Heiberger, the company president. "That's double what we had about six months ago," he added.
: Most brokers agree that since October, "special offers" to tenants and rental agents have increased. Mr. Edwards said Halstead's 54 agents had been barraged by landlords' offers of markdowns and bonuses. One recent flier offered $1,000 off the first month's rent for apartments in a new building at Rutgers Street and East Broadway on the Lower East Side.
: "Not a day goes by when we don't get a pile of e-mails or faxes from landlords, reducing prices," Mr. Edwards said on Thursday, brandishing a stack of markdown offers from that day. "And every day, I get calls from the owners of new buildings, asking where the agents are. The agents are sitting at their desks, waiting for the phones to ring."
: Just last Thursday, Joseph Moinian, the developer of 1 West Street, a new building, gave a catered party for agents and tried to persuade them, with promises of bonuses, to bring their clients.
: Within the last few months, the number of discretionary renters — those who are not forced to move but want a bigger or nicer apartment — fell off significantly, Mr. Edwards said. "The majority of our renters are now people who have to move: people who are relocating, selling their apartments here or getting married, or divorced."
: Landlords who last June could pick and choose tenants, along with which calls to take from agents, now fax listings across Manhattan. "Bring Offers!" shouts a faxed listing for a loft on East 12th Street. "New Lower Price!" reads a landlord's fax for a parlor floor in a brownstone on West 9th Street.
: "As per our conversation," one Upper West Side owner wrote in longhand, "please lower our rental to $2,900 for this weekend's ad" — down from $3,100.
: At the still-unfinished Trump World Tower, near the United Nations, one broker is offering a $2,000 bonus to the agent who finds a renter for apartment 10E, a two-bedroom, for $9,500. Across town, Lee Moncho, an English investor who owns one of Donald Trump's new condominium apartments on the Upper West Side, said that last spring, he could have rented his two-bedroom for $6,950 a month. Last week, Mr. Moncho settled for $5,000. "I wanted a warm body — and secure money," he said. "I'll take that any time."
: Though the number of leases signed typically declines around the holidays — Mr. Heiberger estimated an average of 10 percent — this year it is down 15 to 25 percent at several brokerage firms that keep statistics on rentals (many do not).
: Agents are quick to point out that not every building or apartment has been affected. Buildings in secondary locations, neighborhoods that have less of the cachet and amenities of Greenwich Village, the Upper West Side, Carnegie Hill or other prime areas, were among the first to feel the tug toward price reductions. But even in those prime areas, agents say, landlords have become negotiable, lowering rents in individual deals. "The biggest drops are in the older buildings, where one-bedrooms were overpriced at $3,700, $3,800," said Ms. Pearson of Douglas Elliman. Ms. McCoy of Feathered Nest emphasized that apartments were still renting, although prices were "more conservative."
: Some real estate agents say they welcome the price adjustments. Marilyn Harra Kaye, president of Prudential MLBKaye International Realty, said the reductions, which she documented in a score of examples, were "a healthy thing."
: "We've been losing renters to Westchester, to New Jersey and to the other boroughs for so long that rents coming down in Manhattan is good news," she said.
: As newcomers frightened by Manhattan's high rents turned toward the outlying boroughs and other locations, prices rose significantly there, but still remained lower than in Manhattan. In the prime Park Slope section of Brooklyn, prices soared, but one-bedrooms were still 25 percent lower than in Manhattan, said Mark L. Pipes, a rental agent with William B. May Real Estate. In the commuter neighborhoods of New Jersey, rents may be even cheaper. While prices may be starting to stabilize in these outlying areas, they have not started to drop, brokers say. Only in the high-rent parts of Brooklyn Heights are landlords slightly more negotiable these days, Mr. Pipes said.
: In Manhattan, one bedrooms that rent for less than $2,500 move fast. "Anything under $2,500 for a one bedroom still flies off the hook," Mr. Heiberger said. "Studios under $1,800 fly, too."
: Mr. Heiberger told cautionary tales of landlords and co-op owners who wanted to sublet last year, but who held out too long. "One guy on 11th Street between Fifth and Sixth thought he could get $20,000 a month," the agent said. "He held out all summer. He turned down offers of $16,000 and $17,000. In December, he took $9,800."
: In July and August, Ms. Pearson said, rental prices were still climbing 15 to 17 percent over the previous year's figures through most of Manhattan — with gains of 20 to 22 percent in buildings downtown. "Rises like that are definitely a thing of the past," she said last week. "And the owner paying the fee? We haven't seen that in years."
: Rents will probably go up again eventually, predicted Michael Moran, the listings and operations manager at the Corcoran Group — but probably not before they have further dipped, especially in certain areas. "Within the next 12 months, there will be close to 10 new buildings opening in the downtown-west area," he said of the Chelsea section, between West 20th and 30th Streets. "This will surely bring down rents, and I am sure landlords will be more flexible in lease terms."
: After stock values tumbled in the late 1980's, rents stayed high for two years. "This time, the landlords are responding much more quickly," Mr. Edwards said.
: Manhattan's landlords are "positioning themselves to avoid surprises," Ms. Pearson said. "The market will shake itself out."
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