- NYC landlords are yanking apartments off the market amid low rents and demand, The WSJ reported.
- They’re trying to prevent New Yorkers from locking in deals, betting on a spring-summer rent rebound.
- Experts told Insider rents won’t fully rebound until the city fully reopens – likely 2022.
- Visit the Business section of Insider for more stories.
New York City real estate is a finicky game: Apartment-hunting New Yorkers have been scoring deals left and right, but some landlords are trying to beat the discounts by holding empty apartments until prices rebound.
They’ve been yanking empty apartments off the market while demand and rent are low, a practice known as “warehousing,” The Wall Street Journal’s Will Parker reported. While warehousing is a typical approach when demand is down, Parker wrote, it’s reached new heights amid the work-from-home economy and stronger tenant eviction protections.
Parker cited data from real-estate analytics company UrbanDigs: During peak warehousing in August, landlords pulled 5,563 unrented apartments off the market. That dropped to 1,814 unrented apartments off the market in February, but the latter number was still triple the amount of apartments taken off the market in February 2020.
Landlords are likely holding these units in hopes of higher rental prices come spring and summer as the vaccine rollout continues, John Walkup, cofounder of UrbanDigs, told Parker, preventing more New Yorkers from locking in long-term deals.
New Yorkers are scoring deals on rent drops and concessions
“The pressures COVID placed on the marketplace created a unique opportunity to secure leases in prime locations and great buildings for significant discounts,” agent Ryan Kaplan, of Douglas Elliman, previously told Insider.
Rents in Manhattan, Brooklyn, and Queens all had the largest year-over-year declines on record over the last year, dropping a whopping 15.5% in Manhattan and 8.6% in both Brooklyn and Queens, per StreetEasy’s January Rental Report. The median asking rent in Manhattan was $2,750 – the lowest it’s been since March 2010, when rents dropped during the Great Recession.
Some buildings are even offering concessions of two to three months free on leases, which lowers a tenant’s net rent and can allow them to rent out a nicer building with more amenities.
Chris Schmidt, senior vice president of Related Companies, which owns luxurious rentals at buildings including The Strathmore on the Upper East Side and One Hudson Yards, where one-bedrooms can go for as much as $7,453 a month, told Insider in February that Related’s rents were trending down about 15% to 25% depending on the unit type.
Millennials in particular have been taking advantage of falling rents and discounts, upgrading to luxury apartments that suddenly fit within their budget in pursuit of more amenities, space, and the solo life.
But how long these deals will last depends on when the city fully reopens, Schmidt said, and he anticipates more real-estate momentum as vaccinations continue. “That’s going to force a lot of people seeing these steeper discounts to make a quicker decision,” he said, adding that as soon as there’s a better indication of when the workforce will return to offices, rents will start to go back up to pre-pandemic levels.
Nancy Wu, a StreetEasy economist, recently told Insider’s Libertina Brandt she doesn’t think that will happen in 2021.
“Rent will continue to be lower than they were a year ago for the full year,” she said. “Even with the vaccine coming, it’s not going to magically make the huge glut of inventory go away. Prices will continue to fall until the inventory settles a bit, more people come back to the city, more jobs are recreated from the loss of small businesses, and the city returns, somewhat, back to where it was before the pandemic started.”