Manhattan rental transactions surged in the fourth quarter of 2009, while rents dropped modestly, according to market reports released by two large city brokerages today (see full reports below).
A marketwide report released by Prudential Douglas Elliman estimated that the number of rental deals in Manhattan leaped 47.6 percent to 2,456 in the fourth quarter, from 1,665 in the same period of 2008. Citi Habitats, the city’s largest rental brokerage, said it did more than 2,600 transactions in the fourth quarter, an increase of 30 percent from roughly 1,800 in the prior-year-quarter.
(In a market where rental data is notoriously difficult to obtain, firms use different data to compile their reports.)
Moreover, listing inventory dropped 21 percent to 5,255 units, from 6,640 during the fourth quarter of 2008, according to the Elliman report, which was prepared by appraiser Jonathan Miller, president and CEO of real estate appraisal firm Miller Samuel.
The upswing in activity “is a positive development, and we’ll take it,” Miller said, though he noted that the fourth quarter of 2008 saw particularly low levels of activity because of the Lehman Brothers collapse.
“There was clearly a surge in activity coming from a very low point from this time last year, which was post-Lehman,” he said.
Rental prices, meanwhile, are lower than last year, but not drastically so.
Elliman’s report pegged the average monthly rent of a Manhattan apartment at $3,789, 4.3 percent less than $3,958 in the same quarter of 2008 and roughly on par with third-quarter 2009. The median rental price was $2,900, the report says, dropping 9.4 percent from $3,200 in the prior-year-quarter and 1.7 percent from the previous quarter.
“There’s still weakness out there, but the rate of decline has eased to the point where we’re arguably approaching stable ground, for now,” Miller said.
Citi Habitats, which only tracks apartments rented by its own agents, said average rents fell between 5.8 and 7.3 percent year-over-year, and dipped 1.5 to 3.3 percent from the third quarter.
Neither of the reports account for the incentives that tenants are frequently offered in the current market, like months of free rent or waived brokers fees. Both Miller and Gary Malin, president of Citi Habitats, agreed that if those factors had been taken into consideration, rents would appear considerably lower.
“If you factor in owners’ concessions, rents are probably down 10 percent,” Malin said.
He attributed the uptick in rental activity largely to lower prices and the continuing popularity of these incentives, which helped persuade some renters to move to the city or upgrade to larger apartments.
“The incentives really played an enormous role,” Malin said.
Still, Miller noted, market wide rental activity is far down from the peak, largely because unemployment continues to hover around 10 percent.
His report, for example, found 3,535 rental transactions in the fourth quarter of 2006 — 30 percent more than the same quarter of 2009. The average number of units rented per quarter over the past decade, according to his data, is 4,155.
“We’re definitely getting better, but we’re still not where we were several years ago,” he said. “And that 10 percent [unemployment rate] is what needs to change before you see more rental activity.”