The new Citi Habitats ‘State of the Market’ report just came out and gives us some insight into how the rental market is looking.
Topline:
– Relative to October 2010, Vacancy rose .05%, meaning 1 more apartment per 2000 was on the market than in October. Compared to a year ago however, vacancies are down 33% from 1.87% in 2009. That is a huge difference, but then again fall 2009 was about the worst for both the sale and rental market.
– Overall rents were flat for 2 or more bedrooms, but studios and 1 bedroom units actually gained a point. Market-wide, 1BR units went for $2,545, with SoHo/Tribeca tipping the scales at $3,661 and Washington Heights the lightweight at $1,313.
Funnily enough, rents by type of unit vary by area (staying below 100th).
Studios: Highest in Gramercy/Flatiron at $2,273, Lowest in Midtown East at $1,703
1 Bedrooms: Highest in SoHo/Tribeca at $3,661, Lowest in Upper East Side at $2,225
2 Bedrooms: Highest in SoHo/Tribeca at $5,342, Lowest in Lower East Side at $2,950
3 bedrooms: Highest in SoHo/Tribeca at $7,856, Lowest in Lower East Side at $3,800
It is understandable that SoHo/Tibeca command the highest prices for multi-bedroom apartments. There is very high demand in the area for families who need multiple rooms (often driven by school zoning). As well, the units are very large as they are mostly commercial conversions resulting in a higher square footage per room (commanding higher prices).
Why does EV/LES lead the way in inexpensive 2/3BRs? Aren’t they very popular? Yes, but this has to do with the fact that because of increased demand in these areas most apartments have been restructured to add another bedroom to fit more people in the same amount of space. As these were primarily residential buildings to begin with, you don’t have sprawling layouts like SoHo/Tribeca and have relatively small square footage per room.
As for vacancy rates, citywide it is now at 1.29%. This is much lower than a year ago November when the average was 1.87%. That is roughly a 33% drop in inventory.
Vacancy rates by neighborhood are relatively constant in their order, with the tightest inventory being SoHo/Tribeca (0.63%), West Village (0.78%) and Chelsea (0.87%). The most inventory is in the Upper East and West Sides where the two sides of Central Park average about 1.70%. Despite having lower rents for the most part, these two neighborhoods are extensively residential (tons of supply) and are further from most working hubs with less multi-directional transportation than Midtown and Downtown.
We are all very curious to see how the market weather’s this winter. 2010 was a very stong rental year, so if the market comes out of the gate strong in 2011 next summer could be very competitive, driving up rents and further decreasing owner incentives.
This Braswellian Life 
Posted on December 9, 2010
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