By Oshrat Carmiel
July 9 (Bloomberg) -- Manhattan apartment rents fell as much as 18 percent in the second quarter from a year earlier as rising unemployment curbed demand.
The median price dropped 3.1 percent to $3,100 a month, appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said today. Studio prices fell 18 percent to $2,000; one-bedrooms declined 13 percent to $2,795; two-bedrooms were down 5.1 percent to $4,550 and three-bedrooms dropped 4 percent to $7,673. A separate report from broker Citi-Habitats Inc. showed average rents fell 8 percent for studio and one- bedrooms and 11 percent for two- and three-bedrooms.
“People were kind of in a preservation mode, saying ‘I’m not sure of the future so I’m not going to make any leaps,’” said Prudential Douglas Elliman President Dottie Herman. “Most consumers, when they did not have to make a decision, didn’t.”
The number of new leases signed plummeted 58 percent, according to Miller Samuel. Private-sector employment in the city dropped by 91,200 jobs, or 2.8 percent, in the 12 months through May as Wall Street losses and asset writedowns topped $1.47 trillion. National unemployment climbed to 9.5 percent in June, according to the U.S. Labor Department.
Apartment vacancies across the U.S. rose to their highest in 22 years in the second quarter, New York-based real estate research firm Reis Inc. said yesterday. The last time landlords had so much empty space was in 1987, when the Standard & Poor’s 500 Index lost almost a quarter of its value in three months.
Rent Discounts
“Unemployment has had a much more immediate impact on the rental market than the purchase market,” Miller Samuel President Jonathan Miller said.
Landlords agreed to average reductions of 9.5 percent off their original asking rents, compared with a typical discount of 2.6 percent a year ago, Miller Samuel reported.
“Appropriately priced properties are renting at a far greater pace than those properties that are not,” Citi-Habitats President Gary Malin said in a statement. “It is very clear that prices and incentives have played a larger role in the rental marketplace during the first half of 2009.”
Landlords are offering at least a month’s free rent and paying broker fees, said Ali Jafri, a broker at Prudential Douglas Elliman.
On the Upper East Side, the average apartment price ranged from $1,617 for a studio to $5,214 for three bedrooms. One- bedrooms in that neighborhood averaged $2,133 and two-bedrooms cost $3,075, Citi-Habitats said.
On the Upper West Side, rents stood at $1,744 for studios; $2,304 for one-bedrooms; $3,386 for two-bedrooms; and $5,545 for three-bedrooms, Citi-Habitats said.
Neighborhood Numbers
Miller Samuel said the median rent downtown fell 2.7 percent to $3,200, while on the East Side the drop was 18 percent to $2,550. West Side rents declined 9.4 percent to a median of $2,900; and Uptown it was $1,563, a 29 percent reduction from a year earlier. The company didn’t provide more detailed neighborhood data in its report.
The median price for a building with a doorman dropped 4.2 percent to $3,300, Miller Samuel said. Rents in buildings without doormen dropped 13.3 percent to a median price of $2,250. In new buildings with doormen, the average price for a studio is $2,443, according to Citi-Habitats. A one-bedroom in a new development averages $3,455.
Stephen Shearin, 44, an Internet ad executive from Bayville, New York, began searching for a Manhattan apartment after his daughter finished the school year in June. He’s looking for a two-bedroom near Gramercy Park or on the Upper East Side for no more than $3,000, he said.
“I’ve got a pretty cool unit in mind, but my gut feeling is that if I waited for two more weeks, I’ll get exactly what I want: the backyard, the two bedrooms -- at the price I want,” he said. “I’ll sit out in the hot August until I harpoon the perfect one.”
To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net.
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