Trends In Manhattan Apartment Rents In The Second Quarter 2009
According to the CitiHabitats second quarter report, which was compiled using the company's closed transactions in Manhattan during that period, three of the four apartment types tracked by the report (studios, one-bedroom apartments and two-bedroom apartments) registered minor declines, ranging from 0.2% to 2.1%, while three-bedroom apartments registered a minor increase. In particular, studio apartment rents in Manhattan in the second quarter averaged $1,765, 0.3% down compared to the previous quarter, when they averaged $1,771, and 8.3% down from a year ago when they averaged $1,925. One bedroom apartment rents averaged $2,428, 0.2% down compared to the first quarter of 2009, when they averaged $2,432, and 8% down from a year ago, when they averaged $2,638. Two bedroom apartment rents registered the largest quarterly drop, which was still small. In particular, rents for this apartment type averaged $3,448, 2.1% down compared to the first quarter of 2009, when they averaged $3,552, and 11.3% down from a year ago, when they averaged $3,889.
Although the second quarter averages show that Manhattan apartment rents maybe nearing stabilization, compared to the averages of the first quarter, this conclusion should be viewed with great skepticism. The comparison of simple averages from one period to the other maybe misleading, because averages don't control for changes in the quality/location/price mix of the transaction sample for each apartment type through time. For example, based on the data released by CitiHabitats, there was great variation in the average rent for each apartment type across locations. In particular, the average rent for a studio ranged from $1,078 in Washington Heights to $2,213 in Soho/Tribeca. The average rent for a one-bedroom apartment ranged from $1,369 to $3,276, while the average rent for a two-bedroom apartment ranged from $1,814 to $5,088. Vacancy rate trends during the second quarter were encouraging. The overall vacancy rate in the Manhattan apartment market dropped to 1.88% from 2.36% in the first quarter of 2009. However, it was still above the vacancy rate of 1.12% that prevailed a year ago. Having in mind the reservations that I stated, the data reported provide some signs that the market may approaching to stabilization, but this is yet to be seen and in this environment a worsening of the market in the next quarter can by no means ruled out. So caution is certainly recommended in terms of what lies ahead for Manhattan apartment rents.
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