Notes from the Ground in Gotham City!
By Gus Waite, Managing Broker, Station Cities New York
Vacancy down to near zero. Demand at pre-pandemic highs. We are preparing for a spring market like one we have not seen for years, where professional real estate market expertise and support will make all the difference in a successful relocation. Here’s the latest:
As recently reported in The Real Deal, New York has surpassed San Francisco as the most expensive rental market in the US. Meanwhile, the number of recent tenants who say they applied to five or more apartments before signing a lease doubled to almost 15 percent. MNS Real Estate reports that doorman building, one-bedroom units…those most sought after by many relocation-related and international renters… saw their average rental price increase by 29.22% vs same time last year. In Manhattan, the percent of rental properties in the market priced at $15,000/month or higher rose to its highest share of the market in over a decade.
What we are seeing on the ground is a scarcity of available units that I have never seen in my 20-year real estate career.
Today I was speaking to a long-term leasing agent at one of the largest property management companies in NYC. Good news, no vacancies. Bad news, no vacancies. This company manages over 10,000 rental units in New York. Right now, they have a grand total of 17 available vacant units! 17! That’s a .0002 (way less than 1%) vacancy rate!
As a result, pandemic-driven landlord incentives in the form of a few months’ free rent or landlord-paid broker fees have all but disappeared. Agents who have signed exclusive representation for landlords are picky about setting appointments and sometimes charging broker fees as high as 20%. Negotiations are incredibly one-sided, with many apartments having multiple offers within 24 hours of listing.
What’s causing this unprecedented shortage of apartments?
- There is an eviction moratorium in NYC. 500,000 New Yorkers owe back rent and are not moving. Those apartments are not available.
- Savvy New Yorkers moved up into desirable neighborhoods during the pandemic and got 30- to 50% discounts. If those apartments are rent-stabilized with caps on rental increases, those renters will have below-market rents for decades. They are not moving.
- Other tenants cannot afford to shop the market and upgrade-so they are resigning their leases in record numbers (even at increased rents) and staying put. Right, those apartments are not coming to market.
- Much of the ‘flight from New York’ at the height of the pandemic was to nearby suburbs. Commuting and public transportation in the age of covid gets old quickly. They are moving back to the city and looking for a place within walking distance to their office.
- Foreign nationals who had their moves to the US put on hold during the height of covid are ready to move. There is a 2-year backlog of employees ready to embark on assignments.
- Most universities in New York are back to in-person classes and students have flocked back to the city.
What can we do to prepare to relocate employees for a successful move to New York City?
- Share this information early and often, so they can be fully prepared for the reality of 2 or 3 apartment choices as opposed to 5 or 6.
- Advise being flexible in terms of wants, needs and preferences. Perfect matches will be hard to come by.
- Consider a video tour before arrival and consider leasing an apartment sight unseen. With proper legal guidance and disclaimers.
- Come fully prepared with documentation including
- Letter of Employment
- US Bank Account
- Credit Report
- A Guarantor lined up or secured through guarantor programs from Insurent. The Guarantors and similar professional services
- Do not bring large pieces of furniture to NYC. Shipping is expensive and delayed, and most rooms are smaller than you might expect
Work with one agent and be super responsive to requests for information and appointments. Timing is everything in a fast-moving market.
The good news is Station Cities has a large, talented pool of New York City-based real estate agents who live in NYC, work in NYC and have built up great relationships with hundreds of landlords and brokers. In a tight and tricky market, Station agents will have the slight edge that makes all the difference in finding and securing a new apartment!