NEW YORK - Manhattan rents are expected to continue their fall until New York City's economy picks up and fortunes improve on Wall Street, according to a quarterly report issued by a New York realty firm.
The average Manhattan apartment rents for $3,759 per month, down 2 percent from the prior quarter and down 1 percent from a year earlier, according to the Prudential Douglas Elliman Manhattan quarterly rental report. New York is the largest U.S. apartment market.
The median rent -- where half the rents are higher, and half are lower -- of $2,950 a month was down almost 5 percent from the prior quarter and down almost 8 percent versus a year ago. It costs about $50 per month per square foot, about 3 percent below last year's level.
After a period of sharp declines over the past year, rental rates are now moving sideways, said Jonathan Miller, president and chief executive of Miller Samuel appraisers and the author of the report.
It's a mixed message, Miller said. It's near-term stability, but there's still a tremendous amount of weakness in the rental market, he said.
Miller cited high unemployment, more first-time buyers moving out of the rental market, and landlords' aggressive steps to keep tenants in their apartments, offering concessions like a month or two of free rent.
The biggest rent declines were among large, three- and four-bedroom apartments. A four-bedroom rents for about $13,000 a month in Manhattan, down from more than $26,000 in the third quarter of 2008. By contrast, rents on more typical two-bedroom apartments were down slightly from a year ago and up slightly from the second quarter.
RECOVERY DEPENDS ON WALL STREET
The rental report comes as average apartment sale prices are down 10 percent in Manhattan from a year earlier, reflecting a disproportionate number of layoffs of high-wage earners and new condominium construction.
New York City's unemployment rate rose to 10.3 percent in August, above the national jobless rate of 9.8 percent.
I think we have more weakness ahead of us, Miller said. Wall Street employment continues to fall. In the history of the New York City economy, there hasn't been an economic recovery until Wall Street starts hiring again.
The U.S. apartment vacancy rate rose to 7.8 percent in the third quarter, its highest since 1986, but in New York the vacancy rate is 2.9 percent, according to Reis Inc, a real estate research firm.
(Reporting by Nick Zieminski, editing by Leslie Gevirtz)