While the Financial District residential market is suffering — much like the rest of the borough — Daniel Hedaya, executive vice president of the Wall Street-based firm Platinum Properties, said that more realistic pricing, less inventory coming online and continued landlord concessions could boost FiDi’s rental market in the coming year.
The firm’s year-end rental market report (see report below), based on 2,472 rental transactions in the Financial District in 2009 as compiled by Hedaya and based on landlord submissions, shows that rents have declined year-over-year for all apartment sizes. The greatest decline was a 10 percent drop in average rates for studios, to $2,210 in 2009 from $2,453 in 2008, and the 11 percent drop in average rent for studios with home offices, down to $2,648 per month from $2,980 in 2008. While not in itself a dramatic decline, the drop in rental prices took its toll.
“The market is obviously down,” Hedaya said, noting that he knows some landlords who have offered as much as four months free rent to tenants. Approximately 7.4 percent of apartments rented in 2009 came with three months free rent, according to the report.
As the rents dropped, the vacancy rate in the Financial District more than doubled over 2009, the report shows. Hedaya attributes this to a combination of job losses in the financial sector as well as the glut of new inventory that hit the market between 2008 and 2009. At the end of 2008, the Financial District had approximately 6,686 units available for rent, Hedaya said. By the end of 2009, that number had ballooned to 7,649.
Hedaya, however, said the industry is more modest now; he doesn’t expect more than 500 new rental units to come on the market — including those in new developments and those converted from condos — 2010.
“In terms of new rental developments… there’s not much coming on the market,” in 2010, he said.
Of course, the dismal employment figures, particularly in the financial industry, aren’t a good omen.
“[The market is] definitely tied to the financial industry, I’m not going to discount that,” Hedaya said, but added that the market doesn’t exclusively “hinge” on the financial sector’s success.
The Fidi Report 09