When will NYC rents hit rock bottom?
A lot of people have been saying that people are still continuing to not renew leases. People have mentioned that the effects of COVID had yet to really hit in terms of people not being able to pay rent until the end of this year. Also with many companies saying you wont be able to come back until 2021, will rents bottom around Dec-Jan or will it be early 2021. Also how long will it take for rents to rebound to pre-covid. Will rents still be pretty low come this time next year?
edit: am looking to get a lease. not in RE
No one can answer this question. The two main factors right now IMO are how long this WFH trend lasts and evictions. Probably won't last past mid next-year for most companies. It does give companies data on productivity though that they can use to build regional offices if they see fit and/or hybrid wfh 2-3 days a week and 2-3 days a week in office.
Every report I've read shows a staggering % of tenants not paying rent at this point and that's far more worrying than anything else IMO.
For retail/office?
Multifamily collections have been fine...
Maybe I'm too tuned into local news, but it's become a serious problem here in the SF Bay. If eviction moratoriums were lifted, it would be a bloodbath and further worsen the already terrible homeless situation. $1k/week doesn't go very far here, especially when a large amount of the population are illegal immigrants and don't qualify. I would expect a similar situation in other parts of the country such as in Florida, where the unemployment processing system was designed to fail.
Everyone seemed surprised by how well MF collections held up but they have started to soften a bit. Next month or two will be interesting now that we've hit the fiscal cliff.
I'm in this position OP and my lease is up in a month. I wish I had like two extra months on it to see how low rents will drop, but we just found a great deal in an ideal location that we wouldn't have been able to afford 6 months ago.
On the flip side, you don't want to wait out and see where the bottom is and end up missing the prime rental, and only get a $100 gross discount compared to $900.
I don't have a crystal ball, no one knows what rents will be like a year from now. I can tell you that rents are already down 20%-30% in NYC in my experience. If you see something you like go for it.
It's not going to drop the way you think.
I think there are factors here beyond just supply and demand.
Major landlords CANNOT lower their rents beyond a certain point for a few reasons: if it's a new development, (I may be mistaken here given I'm not in RE) but I believe the loan covenants generally specify a certain amount of rental revenue, and lowered rents may risk violating the covenants. Furthermore, legally, they fear a cap on rent hikes and are NOT lowering their list prices because they need to be on record due to the latest state housing laws.
What you get is a whole bunch of "free months" and net effective rent being listed. Meaning your rent could skyrocket once you resign in a year.
My strategy, which just got me into a VERY nice apt that I offered hundreds under list for, was to look for singly-owned condos/co-ops or brownstones. Small landlords generally just need to pay the mortgage, and aren't worried about IRR or covenants like developers, and aren't hamstrung by on-high to hold rents like the listing agents at places like Archstone.
As a gainfully employed person looking for a rental, you are a unicorn (they can't evict and are worried about people defaulting on rent), and many people are more than willing to make a deal.
Thanks for the advice. Which areas happen to have a large concentration of the type of units you listed? When I think of brownstones I mainly think of Brooklyn. What about the condos/co-ops on brownstones in Manhattan that are affordable?
Lots of brownstones I saw available were in West Village/Greenwich Village in the $2.2k - $2.6k range. Chelsea has a decent amount of co-ops too. But there are some sweet deals in East Village as well.
Spot on, the place I commented on above is a co-op and the deal we may have landed was too sweet to pass up.
Also, if you have a 421-A tax abatement, and take lower rents now, the preferential rent will set you back for years!
So what you said is exactly how it is being done, just give free month’s rent concessions to make the net effective rent lower for tenants but keep the gross rent constant. How many free months are you guys doing? I’m seeing some very high quality buildings offer 3 months free rent on a 1 year lease, plus broker fee covered! This is truly once in a lifetime!
Also, someone let me know they would hate to own rent controlled apartments now as those leases allow the tenant to terminate a lease with two months notice. Market rate should be fine though as those leases do not allow for early lease termination. Is that true?
No. No no no. No one listen to this person, please, they have no idea what they're talking about. This is not how preferential rents work, this is not how 421-a units work, this is just wrong on a lot of levels.
How dare you even imply such a thing!
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