New Yorkers returning to the office reckon with an overheated rental market

  

Category:  News & Politics

Via:  perrie-halpern  •  4 weeks ago  •  18 comments

By:   Haley Messenger

New Yorkers returning to the office reckon with an overheated rental market
Rent prices rise as New Yorkers return to the city and companies push back open-office dates.

S E E D E D   C O N T E N T



Jasmine Perillo, a 26-year-old digital strategy consultant who has lived in New York City for eight years, has never found it as difficult renting an apartment as she has this summer. After one of her roommates moved home and the other moved uptown, Perillo began a seven-week journey at the end of May to find an apartment as her return-to-office date neared.

After looking at more than 60 apartments, attending open houses where as many as 30 people showed up and expanding her search to all of Manhattan, she found everyone was returning to the city and looking for a place to rent. She finally found a studio apartment in the West Village for under $2,500 a month.

"The lines ended up being everywhere. I thought it was going to be only downtown, but, yeah, some of the crazier lines were on the Upper West Side," she said. "Never seen the market like this. It's actually insane."

Jasmine Perillo outside a building where she couldn't get an apartment in the Chelsea neighborhood of New York City on Aug. 12, 2021.Roshni Khatri / for NBC News

As New Yorkers return to the city — or arrive for the first time — with expectations to return to work or in-person classes in the fall, they have flooded the rental market looking for anything they can find.

According to recent data from real estate brokerage Douglas Elliman, more new leases, excluding renewals, were signed in Manhattan, Brooklyn and the northwest part of Queens last month than any other July in over 10 years.

"Everybody who you speak to in the industry knows that this is a crazy, crazy market now," said Raymond Gani, a real estate broker for Misrahi Realty Group. "I don't think it's ever been a summer where there has been so many people interested [in] every apartment that comes up."

To be fair, rental prices for New Yorkers have yet to return to levels seen at the start of the pandemic. According to data from StreetEasy, Manhattan median asking rent hit $3,000 last month for the first time since July 2020. But that's still below a high of $3,500 seen in March 2020, before prices started to come down. In Brooklyn, median rent rose to $2,600 in July, a $100 jump since June and $100 difference from the March 2020 high of about $2,700. Median rent in Queens rose to $2,200 last month, inching closer to — but not quite matching — the high of $2,400 seen in March and April of last year.

The competition for New York City rentals during Jasmine Perillo's nearly 2 month apartment search, from left, the Upper West Side, Kips Bay, and Chelsea.Courtesy Jasmine Perillo

On the other hand, rent discounts — once a pandemic staple — are falling. In Manhattan, rent cuts hit their lowest level in a decade in July, falling nearly 25 percent year-over-year to 9.5 percent, according to StreetEasy. Rent cuts dropped 15.3 percent in Brooklyn and 11.7 percent in Queens last month compared to a year ago.

Typical market


Some New Yorkers who anticipated this frenzied market tried to get ahead of the crowds and returned to the city earlier.

Sasha Minovsky, who works as an operations associate at the travel nursing firm Nomad Health, returned to the city in June to get settled in before she has to return to the office in September. She left the city at the beginning of the pandemic last year and moved to Iowa with her partner, who is from there.

"I think I got in at the right time," she said, referring to the price at which she rented her apartment.

But that has also meant these renters are back in the city as the delta variant takes hold and more companies delay their return-to-work dates. In early June, Griffin Kao, a product manager at Google, signed a three-bedroom lease with two friends in the Gramercy, East Village, area after living and working from home for a year back in his hometown of Philadelphia, following college graduation in May 2020.Even though his office return was delayed from September until October, he is relieved to have rented when he did.

"I kind of wanted to, like, you know, to start my new life in New York," said Kao. "And hopefully it's only like one or two months."

Big return


The renters who are returning now are facing a market with far more demand and less supply. According to StreetEasy, inventory levels in Midtown, the Financial District, East Village, Battery Park, Chelsea, Greenpoint and Downtown Brooklyn in July were below what they were during the same time in 2019.

"We are seeing that rates for rental inventory dropping this summer is a bit faster than it was two years ago, the last time when we had seasonality comparisons for July," said Nancy Wu, an economist at StreetEasy and Zillow. "Right now, not only are we getting seasonal effects but we're also getting the effects of people moving back to the city all at once."

Gani — who rents in neighborhoods like the Lower East Side, SoHo, Nolita, Tribeca, Upper East Side and Hell's Kitchen — has seen the imbalanced supply and demand pool while showing units to clients this summer.

"Last year, we had, let's say, 500 apartments but only 50 people looking. This year, we have 500 people looking and only 50 apartments," he said. "There's a surge of people coming back into the city, but there's not a lot of inventory."

Ignoring delta


Even the recent rise in cases caused by the delta variant has not stopped Gani from receiving a flood of emails, texts, calls and StreetEasy messages. Earlier this month, the broker said he received 99 inquiries via StreetEasy within the first day of listing a two-bedroom apartment on Rivington Street in the Lower East Side renting for $3,500.

Becki Danchik, a real estate broker for Warburg Realty, who represents clients in Manhattan, is seeing similar trends. Earlier this summer, Danchik said she received 300 inquiries across seven apartment listings in less than one day.

"Between last year and now, the rental market has gone from zero to 100," she said. "It takes me like hours to just respond to people."

Wu noted downtown neighborhoods that young people are eager to return to are the most in demand.

Jasmine Perillo outside a building where she couldn't get an apartment in the West Village neighborhood of New York City on Aug. 12, 2021.Roshni Khatri / for NBC News

"We are seeing that the inventory numbers in East Village, in a lot of areas of downtown Manhattan, are dropping way faster than they are in Upper East Side, or even areas in Brooklyn, where we're seeing generally less demand from the younger, more mobile renters," Wu said.

But as neighborhoods with fewer young people remain less desirable, Wu recommended that aspiring tenants broaden their search, like Perillo did.

"It's a very hard time for the market," she said. "But it's definitely a possibility to research and see other neighborhoods and consider the tradeoffs there."

Haley Messenger


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evilgenius
Professor Guide
1  evilgenius    3 weeks ago

Interesting article. I don't understand this "return to the city" issue... Why did people leave knowing they would have to come back eventually? It's odd to me, but maybe it's only me.

 
 
 
Veronica
Junior Guide
1.1  Veronica  replied to  evilgenius @1    3 weeks ago

I was thinking that also - unless they couldn't afford to stay with no money coming in????? 

 
 
 
evilgenius
Professor Guide
1.1.1  evilgenius  replied to  Veronica @1.1    3 weeks ago
...unless they couldn't afford to stay with no money coming in?

Then how can they drop first and last month's rent plus a deposit on a new apartment. It says the average is $3k per month. That's a lot of cheddar!

 
 
 
Veronica
Junior Guide
1.1.2  Veronica  replied to  evilgenius @1.1.1    3 weeks ago

I know - I can't even imagine that for a small apartment.  

I don't know if I would have left, but Covid ripped through NYC like an out of control train - maybe food was scarce since so many depend on local shops for their supply...  I can't say.

 
 
 
Krishna
Professor Principal
1.1.3  Krishna  replied to  Veronica @1.1.2    3 weeks ago
I know - I can't even imagine that for a small apartment.

Rents have always been higher in most big cities. IIRC, the most outlandish were in cities like NYC and the San Francisco and the Bay area. The latter mainly due to Silicon Valley and all the big tech companies there

(That was before the pandemic, I don't know if it still true).

However there's another side to the story-- while rents are generally much higher in some of these cities-- so are salaries in most cases!

 
 
 
Paula Bartholomew
Professor Guide
1.1.4  Paula Bartholomew  replied to  evilgenius @1.1.1    3 weeks ago

Maybe they got jobs elsewhere and were able to find low cost apartments so they saved up.

 
 
 
Krishna
Professor Principal
1.1.5  Krishna  replied to  evilgenius @1.1.1    3 weeks ago

It says the average is $3k per month. That's a lot of cheddar!

Well here's the nature of averages-- depending on what they are averages of-- in many cases some individuals are way above--or way below the averages!

And especially in some of the largest cities-- there are quite a few extremely wealthy people-- which brings the average way up-- but there are still people paying a lot less than the average.

That's the nature of averages .

(And I won't even begin to discuss the mode, the media, etc jrSmiley_2_smiley_image.png )

 
 
 
Krishna
Professor Principal
1.1.6  Krishna  replied to  Krishna @1.1.5    3 weeks ago

And especially in some of the largest cities-- there are quite a few extremely wealthy people . . . which brings  the average   way up.

For example, Jeff Bezos. I believe he has several incredibly expensive residences in many cities-- here's one he recently purchased in NY. (Well actually it wasn't one apt-- his new home consists of one apt and two others below it!):

The richest man in the world, Jeff Bezos, needs the tallest throne and he found it at 212 Fifth Avenue, where he purchased the penthouse, and the two other apartments below it. Bezos now owns nearly $100 million of real estate in the one building.

There's speculation that he's going to combine them to make one home, but it hasn't been confirmed. Regardless, the penthouse designed by Pembroke & Ives is a spectacular piece of architecture and we have the pictures to prove it.

P.S. I believe he's no longer the richest in the world (?) as he split with his wife and she received a large share of his former fortune.

 
 
 
evilgenius
Professor Guide
1.1.7  evilgenius  replied to  Paula Bartholomew @1.1.4    3 weeks ago
Maybe they got jobs elsewhere and were able to find low cost apartments so they saved up.

Interesting... they left the city, found low cost apartments and got jobs there. Then now want to return to the city with high cost apartments and either new jobs or returning jobs? I wouldn't doubt that may be the case for some of the people talked about here that really like city life. That logic is odd to me, but I don't doubt it.

 
 
 
JohnRussell
Professor Principal
1.2  JohnRussell  replied to  evilgenius @1    3 weeks ago

I think a lot of people left when New York's death toll and infection rate was the highest in the nation. In other words, near the beginning. 

 
 
 
evilgenius
Professor Guide
1.2.1  evilgenius  replied to  JohnRussell @1.2    3 weeks ago

Maybe... I know a lot of people left cities and continued to work jobs remotely. Now that businesses want people to work back in the offices it's going to be tough on those people, but I don't find a lot sympathy for not planning for this. 

 
 
 
Krishna
Professor Principal
1.2.2  Krishna  replied to  evilgenius @1.2.1    3 weeks ago

 I don't find a lot sympathy for not planning for this. 

But how could people have planned for the severity (& duration) of the Pandemic? Especially when, at the beginning, the president and Fox News was constantly down playing the severity of it?

Now that businesses want people to work back in the offices.

Actually it varies. Some do more than others.

And it seems many may end up still allowing people to work at home a few days/week, but require them to come into the office for only one (or two) days/week. 

 
 
 
Paula Bartholomew
Professor Guide
1.2.3  Paula Bartholomew  replied to  Krishna @1.2.2    3 weeks ago

A friend of mine ended up working remotely.  At first it had a few glitches but after six months, she loved it and her boss loves her work.

 
 
 
evilgenius
Professor Guide
1.2.4  evilgenius  replied to  Krishna @1.2.2    3 weeks ago
But how could people have planned for the severity (& duration) of the Pandemic? Especially when, at the beginning, the president and Fox News was constantly down playing the severity of it?

How many people were fleeing cities at the beginning? When they did leave were they thinking they were never returning OR were they thinking they'll be back later? 

Actually it varies.

True, but irrelevant to my comments. My fiancé does a half day a week to fax and file the rest of the time remotely from our spare bedroom. I've set up our office here for anyone to work remotely - several people do.

 
 
 
JBB
Professor Principal
1.2.5  JBB  replied to  evilgenius @1.2.4    3 weeks ago

My Bronx neighborhood is suddenly packed with new Mercedes Benz and Audis. What is up with that? Ten units in my building sold in the last few months. It is a seller's market...

 
 
 
evilgenius
Professor Guide
1.2.6  evilgenius  replied to  JBB @1.2.5    3 weeks ago
It is a seller's market...

Yup.

My Bronx neighborhood...

When can I come visit? I'm vaccinated and house broken.

 
 
 
Krishna
Professor Principal
1.3  Krishna  replied to  evilgenius @1    3 weeks ago
Why did people leave knowing they would have to come back

What makes you assume they all "knew they would have to come back eventually"?

 
 
 
evilgenius
Professor Guide
1.3.1  evilgenius  replied to  Krishna @1.3    3 weeks ago
What makes you assume they all "knew they would have to come back eventually"?

It was more of a question in my head, rather than a statement. I'm more interesting in what was in that decision making process for leaving. Did they think it would be remote work forever? ...I'll deal with returning later whenever/if ever? I'll never go back and then changed their minds? I'm interested in why people do what they do. It often mystifies me...

 
 
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