Manhattan apartment vacancies soar despite plummeting rent prices

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The number of empty apartments in Manhattan reached its highest level in 14 years last month despite rents dropping to record lows as landlords desperately try to bring in new tenants. 

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A market report released this week found 16,145 rental apartments in Manhattan sat empty in October, a slight increase from the 15,923 vacancies the month before.  

That rate has tripled from the nearly 5,100 vacancies this time last year as many New Yorkers who fled from the Big Apple at the onset of the coronavirus pandemic have yet to return as the city weathers a struggling surge in crime.  

The report, from appraiser Miller Samuel Inc. and brokerage firm Douglas Elliman Real Estate, shows that Manhattan’s vacancy rate hit a record high for the sixth month in a row at just over six percent – up from the one to two percent prior to the pandemic.   

Meanwhile median rent in the city has plummeted by nearly 16 percent over the course of this year to $2,868, the lowest level in nine and a half years. 

Landlords desperate to fill empty units have been offering massive discounts which appear to be working to some extent, as 5,641 new leases were signed in October, up 33.2 percent from the same month last year and 12.4 percent from September.

The market share of discounts nearly doubled from 36.9 percent last year to 60.4 percent in October, with landlords offering an average of 2.1 months free.  

Despite the increase in new leases, the total number vacancies has continued to grow since July, when there were just over 13,100 across Manhattan.     

Brooklyn has also seen a significant spike in vacancies with nearly 4,400 in October – the second highest level in the past decade and a more than 200 percent increase from last year, according to the Elliman report. 

Rent prices in the borough have declined much less dramatically than in Manhattan, leading to a smaller number of new leases with just 1,393 last month. 

Brooklyn’s median rent fell one percent to $2,764 from September to October, a 2.5 percent drop from last year.  

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Brooklyn has also seen a significant spike in vacancies with nearly 4,400 in October – the second highest level in the past decade and a more than 200 percent increase from last year

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Brooklyn’s median rent fell one percent to $2,764 from September to October, a 2.5 percent drop from last year

The latest rental figures came as another report estimated that New York City and the state have lost a combined $1.4 billion in tax revenue this year as real estate transactions in the city plunged during the pandemic.

In October, real estate sales volume in New York City declined 34 percent from last year, and tax revenue generated by those sales plunged 57 percent, according to data released on Thursday by the Real Estate Board of New York (REBNY).

So far this year, total real estate sales volume has plunged a staggering 50 percent, to $34.5 billion, representing a 39 percent decrease in tax revenue.

The stunning decline in sales of homes and commercial buildings came as residents fled the city, businesses closed and offices went remote after the pandemic, government ordered shutdowns, and soaring crime made life miserable for many New Yorkers.

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In October, real estate sales volume in New York City declined 34 percent from last year

Reeling from plunging tax revenue, Mayor Bill de Blasio has said that the city is in a $9billion financial hole and pleaded for a federal bailout, a call echoed by the real estate trade group. 

‘This $1.4billion in lost tax revenue represents another 1.4 billion reasons why the federal government must deliver a new stimulus package to help address New York’s economic crisis,’ REBNY President James Whelan said in a statement. 

‘As real estate market activity remains at historic lows, the negative impacts are being felt every day by millions of New Yorkers who rely on publicly funded government services that will continue to struggle without necessary tax revenue,’ he added.

The new data shows that while there was an uptick in real estate transactions from September to October, volume still remains well below the same period a year ago.

From September to October, sales of commercial and multi-family rental properties increased four percent to $1.74billion, though this remained down 52 percent from last year. 

Residential sales volume jumped 61 percent from September to October, but was still down 14 percent from last year.   

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