By Tyler Durden,
The number of empty rental apartments in Manhattan has tripled compared with last year, forcing some landlords to become increasingly desperate as they struggle to find tenants amid an urban exodus.
Douglas Elliman and Miller Samuel’s August report showed the number of empty rental apartments in Manhattan surpassed 15,000 units in August, up from 5,600 a year ago.
Facing a glut of inventory, with demand quickly collapsing, landlords are becoming desperate – consider this:
“Don’t pay rent until 2021, select properties now offering up to three months complimentary rent,” read the message banner of a New York City apartment listing’s website, operated by Related Rentals Corporate.
By the month, landlords are becoming more desperate to find tenants as an urban exodus, triggered by the virus pandemic, social unrest, and remote working has collapsed demand. There’s also a seasonal factor as colder weather blankets the region and makes it less likely that people would want to move.
Referring to the developing inventory glut crisis, Gary Malin, chief operating officer of brokerage Corcoran Group, which represents landlords, told Bloomberg, “You can’t hide it anymore… Owners are saying to themselves, ‘I’d rather be honest from the beginning, rather than play a game back and forth, and otherwise lose a tenant.’”
Malin said the glut gives renters incredible leverage over landlords, with the ability to find “the best possible deal.”
“Tenants are filling out four to five applications at the same time and negotiating one offer against the other,” he said. “Owners want to lead with their best foot. If you sit and try to hold on for every last penny, for every last dollar, tenants are just going to go somewhere else.”
Other properties in New York’s downtown area are offering similar free rent schemes, including Brookfield Properties’ Gehry tower. There’s also Equity Residential, who has deals at some of its luxury buildings, including Prism at Park Avenue South.
Ofer Yardeni, Chairman and CEO of Stonehenge NYC, said occupancy before the virus lockdown was about 99%. Shortly after, the figure fell to 85% as some tenants returned home to live with their parents, while others moved to the suburbs. He said remote working was also a significant factor in why people left the city.
“I’ve been in the business for over 30 years and I’ve never seen the market this way,” Yardeni said. “It’s almost like a falling knife.”
We’ve focused on CMBS shorts from malls to hotels; maybe it’s time to start looking at apartment buildings…
The next housing crisis is here, and this time, it’s about rentals.
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