Rental Market Bounces Back In 2010, Study Finds
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It looks like the rental market has bounced back, according to the yearend market report put out by Citi Habitats.
“The rental market has performed incredibly well in 2010,” says Citi Habitats president Gary Malin. “Every metric that you would use to judge its success has rebounded significantly from 2009.”
Malin says the Manhattan rental market has done a complete 180 from a year ago. In 2010, there was a steady increase in price, bringing the average rents way up.
“Average studios are approximately $1,800 and change,” says Malin. “One beds are rounding up to about $2,500, two beds are around $3,500, and the three-bedroom category is close to $4,700 a month. Now, obviously that’s a pure average and you are talking about non-doorman, you’re talking about walkup buildings. You are talking about super luxuries. But that’s an overall average in the marketplace.”
And it seems concessions, like free months’ rent and waived brokers fees are mostly gone. The report finds that at the end of 2009, 60 percent of Citi Habitat’s deals included concessions, but by this past December that was down to 22 percent.
In 2010, new development was absorbed relatively quickly. The report finds the overall the vacancy rate dropped to 1.21 percent in December, down from 1.79 percent the year before.
Malin says the uptick in rentals is partially due to the volatile sales market.
“I think the financing aspect in the sales market has become incredibly tight and stringent,” says Malin. “And because of that, certain buyers who used to qualify for mortgages are having a much more difficult time. Maybe they need a year or two to building of that nest egg, building their credit scores back up and they are going to take the safe approach which his renting in Manhattan for a year or two.”
The report finds that three bedrooms are the highest in demand. And, since demand is high and inventory is low, prices are high.
Downtown areas like SoHo, TriBeCa, West Village, Chelsea and Gramercy are still among the hottest neighborhoods, with the highest prices. It seems the Upper East Side still offers the best deals.
But if the economy and unemployment improve, Malin predicts the market will get even tighter in 2011, which means finding a good deal anywhere may be a tough task.