A Chelsea Tower rental apartments billboard.
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New leases for Manhattan apartments plunged by 71% in April, and vacancies soared as the rental market froze amid the coronavirus pandemic and more residents left the city, according to a new report.
The number of new leases fell to 1,407, the lowest total in a decade, according to a report from Douglas Elliman and Miller Samuel. The vacancy rate climbed to its highest level in 14 years, according to the report.
The declines were the clearest sign yet in the rental market that Manhattan residents are leaving the city in the wake of the coronavirus, which has hit the city especially hard and sparked predictions of a mass flight to lower-density suburbs.
“People leaving the city is definitely part of it,” said Jonathan Miller, CEO of real estate appraiser Miller Samuel.
Yet the report also showed a big increase in median rental prices due to a fluke in the data. The main cause of the increase is the lockdown, which has made it difficult for renters to tour apartments and commit to new leases, Miller said.
The median rental price increased by 4.9% in April to $3,650. Rental prices per square foot — at $74.20, reached a record.
Miller said that because the rental data mainly includes new rentals, which make up only about a third of the market, it doesn’t reflect rent reductions made by landlords to existing tenants. He said price cuts are more likely to show up in future reports as the lower prices feed through to new rentals.
“We will see weaker rental prices down the road,” he said.
Brokers say landlords have already started making concessions in hopes of keeping tenants, from reduced security deposits to a free month’s rent. One landlord in downtown Manhattan is even throwing in a free Peloton in hopes of appealing to workout-from-home renters.
The low end of the rental market could be hardest hit because people in service jobs and the gig economy have experienced the largest job cuts, Miller said. For now, because landlords can’t evict tenants and tenants can’t look for a new apartment, the market is at a standstill.
“Right now, the landlords and renters are stuck together,” Miller said. “The tenant can’t leave and the landlord can’t replace them.”