For the first time in nearly a decade (2011) the median rent in New York City fell below $3,000 to $2,290, down more than 7% from last year. Nearly 44% of all rental listings on Streeteasy had a decrease during the 3rd quarter which is a record. To put things in perspective, the year prior was about 22% of the inventory, so half of the amount. Additionally, the average discount was also higher than the year prior, about 5%. Rental inventory in Manhattan increased by 69.8%, with 72,267 listings available during the quarter — nearly 30,000 more than last year. Landlords are giving more incentives than ever with up to 3-months free and offering current tenants as much as $4,000 if they find takers for empty units in the company’s buildings. Bloomberg wrote a great article on this
There are many reasons for the plummet but the obvious one is the impact of COVID-19. The majority of people are not having to commute to the office 5-days a week who are either operating virtually elsewhere or moved to an outer borough. Another factor is the weak sales market which currently is one of the most attractive buying opportunities New York has had in many years. There are many owners selling at massive losses, some between 10-20% below what they originally paid for. The strong buyer's market with extremely low-interest rates presents an attractive opportunity for investors and those who've been dreaming of their own piece of the Big Apple.
As you can imagine, the office market isn't any better but the numbers might surprise you. The Real Deal just published an article titled "Manhattan office leasing could hit the lowest level of this century"
This may be alarming but what other environments would you compare COVID-19 to? "Leasing volumes during the recession don’t usually drop off 50 percent,” said Franklin Wallach, Colliers’ senior managing director for New York research. "To put the decline into perspective, after the dot-com bubble burst, leasing activity dropped by 14 percent between 2000 and 2001. During the Great Recession, from 2007 and 2008, it fell by 18 percent", Wallach said.
I think we can all agree why it does make sense as to why office leasing in the third quarter was down 50% from last year and to why the numbers are what they are. The question is what the journey of recovery looks like.