The board that oversees rents for New York City’s one million rent-stabilized apartments proposed a range of rent increases on Tuesday, disappointing tenants and their supporters, who say the recession warrants a rent freeze.
In a preliminary vote, the city’s Rent Guidelines Board proposed increases of 2 percent to 4.5 percent for one-year leases and 4 percent to 7.5 percent for two-year leases. Last year, the board approved its highest set of rent increases since 1989 — 4.5 percent on one-year leases and 8.5 percent on two-year leases. The board will hold two public hearings, on June 15 and June 17; it is to take a final vote at a meeting June 23.
Landlords have argued that the board’s rent increases in recent years have been outpaced by the rising operating costs of rent-stabilized units. Tenants and some elected officials, meanwhile, have called on the nine-member board to freeze rents for rent-stabilized units, citing rising unemployment, falling median household incomes and growing numbers of tenants in housing court facing eviction for nonpayment of rent.
“This would be an appropriate year to do that,” Wasim Lone, a tenant organizer with the nonprofit group Good Old Lower East Side, said of the rent freeze. “This is the worst recession we’ve seen since the Great Depression of the 1930s.”
A report released last month by the board’s staff found that operating costs for rent-stabilized buildings increased 4 percent from April 2008 to last month; the increase was 7.8 percent in the corresponding period in 2007-8. The report also found that the 4 percent increase was offset by decreases in fuel oil and insurance costs.
The City Council speaker, Christine C. Quinn, said in an interview that she would urge the board to impose a rent freeze, in part because of the impact of the recession on tenants as well as the report showing that operating costs had not risen significantly. “We can create some relief for tenants without creating an unfair burden for landlords,” Ms. Quinn said. “We believe even with a rent freeze, landlords would continue to make a profit. They would just make a smaller profit.”
Since the board was established in 1969, it has never approved a rent decrease or a rent freeze.
Joseph Strasburg, president of the Rent Stabilization Association, which represents thousands of owners of rent-stabilized apartments, said he was disappointed by the preliminary range of increases approved on Tuesday, adding that small property owners had been hard-hit by the economy and had struggled to pay property taxes, water and sewer bills and fuel costs. He said the group was opposed to any rent freeze.
“Ten percent of my membership may not survive by this time next year,” Mr. Strasburg said, referring to small property owners. “We discovered in early fall that they were still paying off their winter fuel bills.”
The final vote last year was a rowdy affair, marked by shouting matches between landlords and tenants, many of whom had sneaked in plastic whistles and blew them at ear-ringing volume during the proceedings. In contrast, the meeting on Tuesday at the Great Hall at Cooper Union in the East Village was sparsely attended. The audience numbered about 100, most of them tenants or tenant organizers.
The meeting gave rise to divergent views on who was suffering the most during tight economic times — tenants or landlords. Steven J. Schleider, a member of the Rent Guidelines Board who represents owners, said that 1 in 10 properties was distressed because rents did not cover expenses. Adriene L. Holder, a board member representing tenants, said the severity of the recession, including rising unemployment, called for the board to adopt no rent increase.
“People cannot shoulder these types of increases being proposed,” Ms. Holder said.
Last year, the board approved a controversial supplemental rent increase for tenants who had lived in their units for six years or more, and a range of similar increases were approved on Tuesday. Owners of buildings with those tenants have the option of charging them the approved increases, or a $20 to $45 monthly increase for one-year leases or $40 to $75 for two-year leases, whichever is greater.
Two legal aid groups, the Legal Aid Society and Legal Services NYC, sued the board over the supplemental increase last year; the case is pending.
On Tuesday, to the howls of the tenants in the audience, the board voted 6-to-3 to approve the range of proposed increases and the range of supplemental increases.
Much of the discussion between board members leading up to the vote centered on last year’s deliberations. Tenants and their supporters last year said that the supplemental increase should not have been voted on, because it was not part of the tentative range of increases the board had previously approved. The board’s chairman, Marvin Markus, said at the time that the board had authorized supplemental increases in previous years and that the board’s actions were within the law.
Great Recession prices are drawing even the most loyal outer-borough dwellers back to Manhattan. The migrants hail from Hoboken, Astoria and the brownstone blocks off Prospect Park, as New Yorkers who found themselves priced out of the gilded isle in the boom years are bidding farewell to long commutes and skinny-jean chic.
Among the lures: $1,600 one-bedrooms on the Lower East Side. Lenient landlords who no longer require security deposits. And an overriding sense that an obscenely overpriced borough is now, well, slightly more reasonably overpriced.
“There’s a part of me that feels like I’m cheating on Brooklyn,” said Keith O’Brien, a 30-year-old in marketing and public relations who recently jumped from a spacious two-bedroom in Greenpoint, Brooklyn, to a Lower East Side walk-up. “But this was a unique moment in real estate history where renters have the upper hand, which seemed unbelievable a couple of years ago. I realized that it would have been foolish not to start looking at places.”
For an extra $100 a month, Mr. O’Brien — a seven-year Brooklyn stalwart — is now enjoying a trendy location and a six-minute commute, in exchange for losing half of his living space. “There’s no sink in the bathroom,” he said, “but concessions must be made.”
Newly minted Manhattanites range from 30-somethings seeking a professional edge through a shorter commute, to out-of-work recent graduates who think they can get a better deal on the Upper East Side than in the usual post-college enclaves of Williamsburg and Fort Greene.
Numbers on the New York rental market are notoriously unreliable, but recent reports suggest that rents are falling faster in Manhattan than in neighboring boroughs.
In the first three months of the year, one-bedroom rents in Manhattan fell 6.7 percent compared with the previous year, while Brooklyn one-bedrooms dropped just 3.2 percent, according to data from Citi Habitats and Ideal Properties Group, both brokerage firms. Other reports show some Manhattan rents down by 10 percent from a year ago.
“I just got lucky with the whole financial meltdown,” said Kristi Giamichael, 26, who earlier this year gleefully tracked falling rental prices on Craigslist from the Hoboken duplex that she shared with two friends. She liked her neighborhood bar scene and the $1,172 rent, but realized Manhattan was no longer prohibitively expensive.
On May 1, Ms. Giamichael and a roommate moved into an 800-square-foot one-bedroom in Ruxton Towers, a landmark prewar building on 72nd Street off Central Park West. The two will split the $2,600 rent, and the landlord paid the fee to their broker, Caroline Bass of Citi Habitats.
Like many young adults, Ms. Giamichael moved to New York at a time of brutally high rents in Manhattan. Those seeking perks like in-house gyms and roof decks flocked to Hoboken and Long Island City, where amenities could be had for the price of a Yorkville walk-up.
Now, prices at upscale rental buildings like 45 Wall Street have come down significantly, discounted by 15 to 20 percent in recent weeks. At 20 Exchange Place, a tricked-out conversion around the corner from the Stock Exchange, the management company will waive the security deposit if the prospective tenant’s credit checks out. Stuyvesant Town offers the same perk on some apartments, along with waiving the broker’s fee.
“We do see that certain neighborhoods in Manhattan may be a better deal than certain neighborhoods in the boroughs,” said Stephen Love, a broker at Ardor Realty.
So some New Yorkers who came to appreciate the outer boroughs — spacious apartments, neighborhood charm — are finding reasons to return.
Matthew Creamer spent nearly a decade in Brooklyn (with a brief stopover in Hoboken), rotating through Smith Street, Cobble Hill and finally Sunset Park, where he spent four happy years in a 1,000-square-foot one-bedroom for $1,400 a month.
“I told a lot of friends that I would never move back from Brooklyn, had no desire to move back to Manhattan,” he recalled. “I said that on a lot of occasions.”
But in March, Mr. Creamer, 32, began to feel anxious about his 45-minute commute to Midtown, where he works as an editor at Advertising Age. “So much has changed in the past six months,” he said. “In the past, people wanted a separation from work on the weekend. I liked the fact that the neighborhood I lived in couldn’t be any more different from the place that I worked.”
Andrew Baisley is Bushwick’s loss and Chelsea’s gain.
Now, Mr. Creamer said, “people are so worried about their jobs and the general economic situation, that people don’t mind being near work. It may even make them feel a little bit safer.”
The possibility of subway cutbacks made him worry about making morning meetings on time. “At a 45-minute commute, it’s not the worst thing in the world,” he said. “But if something goes wrong, it gets ugly really quickly.”
Mr. Creamer began searching for a place near Grand Central Terminal, aware that he would have to sacrifice space (and price) for peace of mind. Last month, he moved into a studio in a building with a doorman at 33rd Street and Park Avenue with views of the Empire State Building. Although he pays more in rent than he did, he calculates that he nearly breaks even, now that he’s free of his monthly MetroCard and hefty late-night cab fares. And he received one month free on a 13-month lease.
The place is a third the size of his last apartment, and he does not have the basement storage he enjoyed in Sunset Park. At times, he misses the neighborhood feel of his old haunt.
“Nothing has changed as far as the way I feel about Brooklyn as far as it being one of the best places on earth to live,” he said. “I doubt I’ll come out of my experience in Midtown thinking that. I’ll probably like it, but I can’t imagine having the same feeling for it.”
Brooklyn on the whole is still more affordable than Manhattan: one-bedrooms east of the river cost an average of $1,901 in the first quarter, compared with $2,432 in Manhattan, according to market reports.
But the flow of Manhattanites into Kings County has apparently slowed. In the first three months of 2008, nearly a quarter of renters moving to Brooklyn hailed from Manhattan. A year later, only 9 percent of renters came from across the river, according to data from Ideal.
And some of Brooklyn’s trademark tenants — underemployed recent graduates — are also changing their minds.
For two years, Mark Schenkel, 25, has lived with roommates in a ground-floor apartment in a Windsor Terrace brownstone. Mr. Schenkel is paying $1,175 a month for a building with no laundry. His commute to work in the West Village was a half-hour haul on the F train.
“I always assumed that Manhattan was way too expensive for me and out of my reach,” said Mr. Schenkel, who moved to the city in 2006. But when his landlord threatened a $100 rent increase, he decided to shop around.
“Just for fun, I started looking at the Upper West, Upper East,” he said. “Everybody talks about how nice and ritzy it is. I was shocked to see some of the prices.”
In Yorkville, for instance, he found rents that were several hundred dollars cheaper than what he and his roommates are paying in Brooklyn.
“They’re a little bit smaller, but they have some of the amenities that I don’t have now,” he said, citing perks like a laundry and an elevator. Most of the apartments he has toured are renting for under $1,000 a person.
“A lot of these places are just desperate to find people,” Mr. Schenkel said. “People are responding to my e-mails within minutes to look at the apartment. People are saying, ‘Come whenever you want.’ ”
Craigslist directed him to a three-bedroom in a small building off First Avenue on 88th Street; the monthly rent came out to $730 a person, with no broker’s fee.
Alas, that particular apartment was “big, but had no kitchen or place to sit,” Mr. Schenkel later wrote on Twitter. “It’s like the builders forgot to include that.”
The recession has not been kind to Mr. Schenkel, who recently lost his job with a record label. But unemployment has only underscored his interest in moving across the river. The Upper East Side is home to big retail franchises like Barnes & Noble and Best Buy that may still be hiring.
In Brooklyn, he said, “all the local stores have two or three people working for them at a time. Mom-and-pop shops don’t need people in this economy.
“I never thought losing my job would be one of the reasons I end up moving to Manhattan,” Mr. Schenkel said, sounding a tad dazed. “It seems backward to me, what’s going on.”
Renters aren’t the only ones looking to move. When Paul Kolbusz, a broker at the Corcoran Group, decided to buy in 2007, he opted for a new development in Long Island City. He was willing to give up Manhattan conveniences for the extra living space.
That was before the bubble burst. Earlier this year, with construction still incomplete, the developer was obligated to offer Mr. Kolbusz the right to rescind his contract. He jumped.
“They were trying to negotiate with me in order to keep me,” Mr. Kolbusz said. “I decided against it because Manhattan opened up in ways that it hadn’t before, and I didn’t want to miss the opportunity.”
Now he is shopping in prewar buildings in Murray Hill, and mulling over a $500,000 one-bedroom with beamed ceilings on East 28th Street. The unit is just $30,000 more than the Long Island City condo he left behind, but has two-thirds of the living space.
Even as rental prices fall, a little bit of luck can’t hurt in finding that dream apartment. Perry Balin, 28, spent a year in a $900 studio in Boerum Hill. Children ran screaming in the hallways and the heat cut out in the middle of winter.
“I’d always wanted to live in the city my entire life,” she said, “and Brooklyn was my second choice. I took it because it was what I could have at the time.”
Encouraged by chatter about cheap apartments, she set off with her broker, Jeff Brenner of Citi Habitats, to a fourth-floor walk-up studio on West 95th Street just off Central Park.
“It faces the back of the building, all of the really rich people’s yards on 94th Street,” Ms. Balin said. “I look out the window and feel like a millionaire.”
Her terrier, Tess, is more social and enjoys walks in the park.
The rent: $1,225 a month. Ms. Balin, an aspiring singer, hummed when she disclosed the figure. “Now, don’t be jealous,” she said with a laugh.
Brooklyn Waterfront Construction
Following in the footsteps of Manhattan, the Brooklyn and Queens real estate markets also posted price declines and huge drops in sales during the first quarter of 2009—but much like the boroughs themselves—they didn't completely follow in the big island's footsteps. Today the Prudential Douglas Elliman/Miller Samuel Brooklyn and Queens market reports were released (available for download here), and there are some juicy findings:
1) Brooklyn: The median sales price in Brooklyn was $474,600 during the first quarter, a 9.9% drop from the previous year's median mark of $527,000. Interestingly, the decline was consistent across all property types (whereas Manhattan resales took a huge dip, while new-development closings actually went up in price thanks to cushy contracts negotiated forever ago). Unfortunately, like Manhattan, the number of sales took a nosedive—down 57% to 1,186. In North Brooklyn, which includes Williamsburg, the median sales price dipped 4.5%. Condos made up 84.5% of all sales in that area. The allegedly invincible Brownstone Brooklyn took a 9.4% hit in its median sales price, which decreased to $1,087,500.
2) Queens
: The median sales price fell 4.8% from last year's $413,000 to $393,000, with similar declines by property type but different peaks and valleys based by region.
Northwest Queens, which includes Long Island City, saw nearly a 16% increase in its median sales price
(to $549,428) thanks to a large amount of new development (new units accounted for 47% of all sales in the area for the quarter). Sales declined 52.2% to 1,801, while inventory surprisingly dropped 7% to 10,421 units. The co-op marker saw the smallest decline in median sales price across the borough, with less than a 1% drop.
As the first quarter closes, we find that prices in Manhattan continue to lag in year-over-year comparisons. The largest difference this month is in doorman studio units, which decreased 10.43%. Doorman two-bedrooms were the relative stand-outs this month, only having fallen 2.59% since this time last year. It should be noted that these numbers do not take into consideration concessions, which would likely have shown an even more prominent downward trend, especially in doorman units.
In month-to-month comparisons, non-doorman units are flat overall, while doorman units fell 2.01%. Hidden within the data was actually an increase in non-doorman two-bedroom units by 2.28%.
As for vacancies, doorman units continue to fall in price while offering aggressive concessions, and in turn, inventory levels have stopped rising and flattened out this month. This is a positive sign for doorman property owners and landlords who have been proactively attempting to fill their units via such actions. Non-doorman units, however, did not see the same price cuts and so their inventory levels actually climbed by 10% this month - illustrating just how price sensitive the current market is.
As Manhattan begins to show direct and proper responses to market actions, I am becoming ever hopeful that we are moving towards a healthier rental market, or at least, that seasonality trends will again be upon us soon. Landlords, property owners and consumers still have a long road to find the middle ground, but I am confident in the market's ability to do so.
| Studios | TriBeCa, $3017 | Harlem, $1291 | TriBeCa, $2680 | Harlem, $1330 |
| One-bedrooms | TriBeCa, $4106 | Harlem, $1635 | SoHo, $4387 | Harlem, $1845 |
| Two-bedrooms | TriBeCa, $6278 | Harlem, $2100 | TriBeCa, $6932 | Harlem, $2717 |
| Studios | TriBeCa +9.54% (+$263) | Midtown West -9.57% (-$225) |
| One-bedrooms | TriBeCa +5.44% (+$212) | SoHo -7.56% (-$359) |
| Two-bedrooms | SoHo +7.03% (+$264) | Lower East Side -8.41% (-$354) |
| Studios | $2059 | $1959 | -4.84% | $2586 | $2316 | -10.43% |
| One-bedrooms | $2792 | $2624 | -6.03% | $3578 | $3329 | -6.95% |
| Two-bedrooms | $3858 | $3738 | -3.12% | $5265 | $5129 | -2.59% |
Non-doorman units hold prices — Non-doorman units across the city were flat on average this month, but even though prices held, vacancies rose 10%. As vacancies rise, it seems that prices may not yet have reached equilibrium levels – especially with inventory levels already high.
Service sees prices fall, but inventories hold — While non-doorman units appear to have continued disparity between supply and demand, the doorman sector seems to be working on a solution. Doorman units saw prices fall around 2% on average this month, but vacancies remained flat. As landlords continue to drop prices and offer incentives, it seems as though excess inventory is being absorbed by consumers looking to take advantage of the market.
East vs. West — In both Midtown and Uptown, the story of price drops can be told in an east vs. west battle. As the bubble began to burst, the eastside saw prices tumble first, but this month, the westside of Manhattan appears to be outpacing its counterpart for price drops. The westside is down 3% this month, while the eastside remained flat.
Harlem—Doorman studios (-1.64%), non-doorman one-bedrooms (-0.97%), doorman one-bedrooms (-1.79%)
Upper West Side—Non-doorman studios (-0.65%), doorman studios (-2.19%), non-doorman one-bedrooms (-2.34%), doorman one-bedrooms (-0.6%), non-doorman two-bedrooms (-1.22%), doorman two-bedrooms (-0.6%)
Upper East Side—Non-doorman studios (-0.67%), doorman studios (-3.28%), non-doorman one-bedrooms (-1.93%)
Midtown West—Non-doorman studios (-5.98%), doorman studios (-9.57%), non-doorman one-bedrooms (-0.64%), doorman one-bedrooms (-5.12%), non-doorman two-bedrooms (-3.42%), doorman two-bedrooms (-3.89%)
Midtown East—Non-doorman studios (-3.46%), non-doorman one-bedrooms (-5.06%)
Murray Hill—Non-doorman studios (-0.85%), doorman studios (-3.02%), non-doorman one-bedrooms (-3.38%), doorman two-bedrooms (-0.61%)
Chelsea—Doorman studios (-1.91%), non-doorman one-bedrooms (-0.66%), doorman one-bedrooms (-0.87%), doorman two-bedrooms (-1.14%)
Gramercy Park—Non-doorman studios (-7.06%), doorman studios (-1.55%), doorman two-bedrooms (-4.35%)
Greenwich Village—Non-doorman studios (-2.33%), non-doorman one-bedrooms (-3.37%), doorman one-bedrooms (-4.1%), non-doorman two-bedrooms (-1.16%), doorman two-bedrooms (-8.4%)
East Village—Non-doorman studios (-1.85%), doorman studios (-0.47%), non-doorman one-bedrooms (-1.05%), doorman one-bedrooms (-6.27%), doorman two-bedrooms (-5.87%)
SoHo—Non-doorman studios (-5.59%), doorman studios (-2.35%), doorman one-bedrooms (-7.56%), doorman two-bedrooms (-1.76%)
Lower East Side—Non-doorman studios (-2.41%), doorman studios (-3.28%), doorman one-bedrooms (-2.56%), doorman two-bedrooms (-8.41%)
TriBeCa—Doorman studios (-0.66%), doorman one-bedrooms (-1.35%), doorman two-bedrooms (-6.52%)
Financial District—Non-doorman studios (0.94%), doorman studios (2.08%), doorman one-bedrooms (2.68%), non-doorman two-bedrooms (7.90%), doorman two-bedrooms (0.80%)
Battery Park City—Doorman studios (-1.44%), doorman two-bedrooms (-1.41%)
Harlem—Non-doorman studios (1.81%), non-doorman two-bedrooms (0.06%), doorman two-bedrooms (1.3%)
Upper East Side—Doorman one-bedrooms (0.99%), non-doorman two-bedrooms (0.49%), doorman two-bedrooms (4.51%)
Midtown East—Doorman studios (1.03%), doorman one-bedrooms (3.35%), non-doorman two-bedrooms (4.16%), doorman two-bedrooms (1.11%)
Murray Hill—Doorman one-bedrooms (0.82%), non-doorman two-bedrooms (3.64%)
Chelsea—Non-doorman studios (4.84%), non-doorman two-bedrooms (3.95%)
Gramercy Park—Non-doorman one-bedrooms (2.8%), doorman one-bedrooms (0.08%), non-doorman two-bedrooms (1.63%)
Greenwich Village—Doorman studios (1.42%)
East Village—Non-doorman two-bedrooms (5.83%)
SoHo—Non-doorman one-bedrooms (3.97%), non-doorman two-bedrooms (7.03%)
Lower East Side—Non-doorman one-bedrooms (1.36%), non-doorman two-bedrooms (4.24%)
TriBeCa—Non-doorman studios (9.54%), non-doorman one-bedrooms (5.44%), non-doorman two-bedrooms (4.74%)
Financial District—Doorman one-bedrooms (0.65%)
Battery Park City—Doorman one-bedrooms (0.49%)
The Mean Rental Price graphs illustrate average monthly rents for studios, one–bedrooms and two–bedrooms in doorman and non–doorman buildings in Manhattan for the month of March 2009. Graphs tracking citywide and neighborhood price changes over a rolling 13-month period follow.
The Manhattan Rental Market Report is the only report that compares fluctuation in the city’s rental data on a monthly basis. It is an essential tool for potential renters seeking transparency in the NYC apartment market and a benchmark for landlords to efficiently and fairly adjust individual property rents in Manhattan.
The Manhattan Rental Market Report is based on data cross-sectioned from over 10,000 currently available listings located below 155th Street and priced under $10,000, with ultra-luxury property omitted to obtain a true monthly rental average. Our data is aggregated from the proprietary database and sampled from a specific mid-month point to record current rental rates offered by landlords during that particular month. It is then combined with information from the REBNY Real Estate Listings Source (RLS), OnLine Residential (OLR.com) and R.O.L.E.X. (Real Plus).
Last month, the most popular applications that could be downloaded to the iPhone from Apple's iTunes store included a puzzle game named "Blocked," a joke generator called "Yo Mama" (sample: "Yo mama so stupid she spent 20 minutes lookin' at an orange juice box because it said ‘concentrate.'") and a public radio tuner.
There were no real estate-related applications among Apple's most-downloaded. Still, a search for the keyword "real estate" turned up roughly 20 applications, the majority of which revolve around rental and sales listings.
Apple only launched their now popular iPhone applications or "apps" last summer, but some real estate companies such as StreetEasy and Trulia have already launched programs. Indeed, each company claims that more than 100,000 users have downloaded the free apps they've created. Representatives from both companies say the touch-screen devices have already become valuable extensions of their Web sites.
StreetEasy's app uses the iPhone's built-in global positioning system to pull up listings near wherever a user happens to be. And, at the moment it has the market to itself as the only real estate iPhone application that focuses exclusively on New York listings.
"If I'm by the Flatiron [Building], I'm going to see apartments for sale in Gramercy," said Dawn Doherty, StreetEasy's vice president for strategic development.
Trulia's app, like its Web site, has a national focus. "We pull in open house data, and no other app does that on a national level," said Rob Cross, Trulia's director of distribution. "You can know immediately with one touch on your screen what's for sale. So, if you're sitting in a coffee shop planning your day, you can see all the properties that you might want to visit."
Cross said Trulia's iPhone app is part of the company's strategy to increase its focus on mobile technology.
"The evolution of real estate is towards mobile, and we need to make it easier for people to search for properties while they're on the go," he said.
Doherty says that while StreetEasy's product is geared towards real estate pros and consumers alike, the iPhone application could be particularly valuable for agents and brokers.
"If I were out practicing real estate now, I would go out and purchase an iPhone just because it's a portable database when you're out and about with clients," she said. "You can be with a client and walk by a building, and the client asks you about it, and you can look up everything that's going on in that building."
While none of the city's major brokerages have iPhone apps, several firms have made their Web sites iPhone-compatible in recent months. Last month, for example, The Real Deal reported that Brooklyn-based Ideal Properties Group launched a Web site specifically for viewing on Apple's iPhone. Others say it's only a matter of time before iPhone applications become commonplace on New York's real estate scene.
ActiveRain Corp. is not responsible for the accuracy of the site's content (which is written by members of the ActiveRain Real Estate Network) and does not endorse the views of the real estate agents, mortgage brokers, and others listed here.
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