Declining New York City rental prices may be tough on commercial landlords, but the trend has been good for emerging businesses, according to The Real Deal’s Editor, Stuart Elliott. The recession has precipitated new enterprises, with companies given the chance to snatch up leases at a bargain rate, Elliott told Fox Business News.
“Since the fallout on Wall Street last year there’s been a big decline in rents so that’s really given a lot of new retailers opportunities to open up in the city and come in for the first time,” Elliott said. Chain restaurant Five Guys burgers is one of many businesses taking advantage of the reduced rates in the city. With sales up 25 to 30 percent year-over-year and an aggressive expansion plan in place, the chain intend to open a Third Avenue spot in the coming weeks.
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Just one month after declines in rents in Midtown seemed to be leveling
off, the average asking rents in October fell sharply as vacancies rose
by their largest amount in nearly a year, a new report by commercial
services firm CB Richard Ellis shows (see the full report after the jump). The average asking rent in
Midtown fell by 99 cents per square foot in October to $56.89 per
square foot, while the vacancy rate rose by .7 points to 10.3 percent,
the CBRE report, covering October, shows. In September,
brokers were buoyed by statistics that showed the average asking rent
in Midtown declined by just 6 cents per square foot, to $57.88 per
foot. But that price support did not continue last month. The price decline in Midtown was the largest since August when it fell $1.46 per square foot, the figures show. The
increase in vacancy is the largest since December 2008, when the rate
rose 1 point to 7.6 percent from 6.6 percent a month earlier, CBRE data
shows. The weakness was not as pronounced in Manhattan overall.
The average asking rent fell by 88 cents per square foot from September
to October, and the vacancy rate rose by .5 points to 9.8 percent. TRD [more]

New hires with delayed start-dates are helping to temporarily support the rental market, but likely won’t be enough to prevent further price declines this winter, according to Daniel Baum, the CEO of TDG/The Real Estate Group New York, which released its October Manhattan rental market report today (see the full report after the jump). This spring, law firms and consulting companies began offering new hires incentives to push back their start dates. For example, in March, law firm Cravath, Swaine & Moore asked first-year associates to postpone their start date with an option of beginning in October, November or January, according to the American Lawyer. These kinds of decisions had an impact on the rental market, Baum said, as those new hires postponed their apartment searches until the fall. That, combined with rising unemployment, led to a slower-than-normal summer rental season, Baum said. He said this group of renters is finally moving to the city and that their presence is helping to temporarily prop up the rental market. [more]

Citi Habitats today released its rental market report for August, revealing year-over-year rent declines in all categories but little change from July.

The average rent for a Manhattan studio apartment in August was $1,756, down 9 percent from $1,919 in August of 2008, said the report (see after the jump), which is based on transactions from Citi Habitats, the city’s largest rental brokerage. The average rent for a one-bedroom was $2,442, down 8 percent from $2,668 in August of last year. Two-bedrooms fell 9 percent to $3,372 from $3,721 last August, and three-bedrooms dropped 8 percent to $4,583 from $4,995. [more]