The number of vacant apartments in Manhattan reaches a record high

The number of vacant apartments for rent in Manhattan has surpassed a record 13. What caused such a sharp drop in the real estate market and why it can be dangerous, said the publication CNBC.

The number of apartments for rent in New York has more than doubled in the past year. This is stated in the report by Douglas Elliman and Miller Samue (Douglas Elliman and Miller Samue).

As the number of apartments for rent reached 13, the number of new contracts signed decreased by 117%. This is a record high in 23 years since data collection began.

The 10% drop in rental rates was also the largest in nearly a decade. Landlords are now offering an average of 1,7 months of free rent to lure tenants in.

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Experts say the reason for such a sharp drop is the mass exodus of its residents from the city. Many left in March and April when the coronavirus pandemic began.

Brokers and landlords hoped that many would start returning in July and August, when the situation improved somewhat and brokers were again allowed to meet in person with potential tenants.

July and August are usually the busiest rental months. However, this year the situation in July has not changed compared to the last months, in August the real estate market also did not change. This suggests that the problems in the market could last until autumn or longer.

Jonathan Miller, CEO of research firm Miller Samuel, said the number of people leaving New York now exceeds the number of people entering.

At the same time, rental prices for apartments in Manhattan are still high. The average rental price for a three-room apartment is $ 4620. However, the so-called effective average rent fell by 10% compared to last year. In addition to offering free leases, brokers offer brokerage fees, add gift cards to Home Depot and other retail stores, and offer primary cleaning services, experts say.

However, the decline continues across all market segments, from high to low. A sharp drop in the number of new leases was observed in all areas of Manhattan, but the Upper East Side suffered the most, with a 39% drop.

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The spike in vacant apartments in the country's largest rental market is likely to have economic implications. Housing experts estimate that roughly half of the apartments rented in Manhattan are owned by small business owners, not large public companies or large, well-funded real estate families. As small landlords lose income, they may lose the ability to pay taxes on real estate, which is New York's largest source of income. Reducing property taxes will entail a reduction in services, making New York less attractive to new residents. "Landlords are likely to have some difficult years ahead," Miller summed up.