Retail and consumer rents in Manhattan have been doing something unusual in recent years: They’ve been moving lower. And that’s helping renters think about reaching for that most important commodity among Manhattan’s rental community: More space.
As Bloomberg reports, Manhattan rental units with three or more bedrooms accounted for 12.2% of new leases in May, the largest share since Douglas Elliman Real Estate started tracking the data in 2011. Excluding renewals, renters signed leases for 767 apartments in this category – a 20% increase from a year earlier. Meanwhile, the median rent for these homes fell 5.8% from a year earlier to an average of $5,650. By comparison, rental rates for two-bedroom units dropped 4.6% to $4,295, while rents for one-bedrooms moved ever-so-slightly higher, climbing 0.3% to a median of $3,459.
With such massive discounts, and a glut of high-end apartments, it might make more sense to trade up to a bigger rental rather than buy, according to Hal Gavzie, Douglas Elliman’s executive manager of leasing. Because, for the first time in years, Manhattan has become a renter’s market.
“We’re getting more people who were in the sales market and just haven’t pulled the trigger” on a purchase, he said. “They’re seeing that it’s a renters’ market, and maybe they’re just looking for that deal.”
Of course, renters who are hunting for the best deal should look toward the outerboroughs like Queens, where landlords are making massive concessions to keep tenants on as a supply glut worsens. This has caused rents to drop by a massive 12% YOY. Beyond renters, small retailers hoping to sell their wares in downtown Manhattan are also finding incredibly favorable conditions as companies looking to sublease their storefronts are undercutting their own landlords. The result has turned lower Manhattan into a “shopping wasteland.”
In what was an epic exercise in seeing the glass half full, Jared Epstein, vice president of Aurora Capital Associates, told Forbes that the drop in rents in retail districts like Soho could lead to a revitalization.
“It’s going to bring SoHo back,” he said. Still, the property owners are suffering with a serious pullback, as rents have fallen nearly 30% in some parts of the neighborhood, like on Broadway between Houston and Broome Streets. But regardless of the broader trends, after years of inexorable rent increases, it seems like retailers and consumers just need a break.
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