Data from The Real Estate Group's December 2007 Manhattan Rental Market Report, released today, shows that rents in the Financial District fell at a significantly sharper rate this month than in other neighborhoods. Financial District asking rents dropped an average of 5% since November, with December's average citywide rents declining by less than 1%. Doorman studio and one bedroom rents showed the most drastic declines in FiDi, by 16% and 11%, respectively.
"The city's rental market usually slows down during the holiday months, but the sudden drop of asking rents in the Financial District's doorman categories strikes us as unusual even for this time of year," says Daniel Baum, COO of The Real Estate Group. "Numbers like this imply that landlords are trying to quickly reduce rents to bridge the gap between the large number of FiDi vacancies and the smaller demand of those seeking them out."
The Financial District has become a hotbed of new residential property development and condo conversions in the last two years, resulting in the creation of a vast amount of housing inventory in a short period of time. Though Financial District landlords commonly offer tenants incentives ranging from flat screen TVs to one month's free rent, it appears such concessions have failed to attract enough renters to fill FiDi properties. Data pulled from The Real Estate Group suggests that Financial District landlords have been forced to slash prices to minimize current and anticipated future vacancies.
Since August's Market Report, which initially foreshadowed an upcoming decline in an otherwise healthy rental season, The Real Estate Group's data has indicated that Manhattan's rental market may not retain full immunity to the rest of the nation's housing woes. Shaky job security and the ongoing credit crunch, combined with the typically slow year-end rental season, has led to the expected December cooling of Manhattan's rental market across most neighborhoods, apartment sizes and service levels. The Financial District's rent prices, however, dipped disproportionately to the city's otherwise gradually softening rental market.
A comprehensive update on price changes in Manhattan neighborhoods can be found in the Quick Look section on pages 4 - 6 of the Manhattan Rental Market Report. Link to the PDF of the December Manhattan Rental Market Report.
The Real Estate Group's Manhattan Rental Market Report is specifically compiled to track the price path of average asking rents throughout Manhattan's 14 neighborhoods below 100th Street, omitting ultra-luxury property to obtain a true monthly average. The data is sorted by service level (doorman vs. non-doorman), neighborhood and number of bedrooms. The Manhattan Rental Market Report is based on data cross-sectioned from over 10,000 currently available listings aggregated from the TREGNY proprietary database and sampled from a specific mid-month point to record current rental rates offered by landlords that month. It is then combined with information from the REBNY Real Estate Listings Source (RLS), On Line Residential (OLR.com) and R.O.L.E.X. (Real Plus).