Manhattan is one of the premier apartment markets in the country, featuring some of the highest rents and boasting an extremely affluent tenant base. The outer boroughs of the Bronx, Brooklyn, and Queens, traditionally more working class, see their rents rise in upturns as rising Manhattan rents drive even fairly upscale tenants to consider alternate destinations. Peripheral locations are more vulnerable in downturns and post larger gains in upturns.
- The 23,003-unit West Village/Downtown submarket, which includes the entire area south of 14th Street, has a second quarter 2012 vacancy rate of 3.1%, second highest among nine submarkets, and an average asking rent of $3,986 per month, also the second highest.
- The 899-unit New York by Gehry apartment completed construction in June 2012, and the vacancy rate increased 100 basis points despite 650 units of net absorption. It is forecast to fall back toward 2.0% by the end of 2012—and below 1.0% by 2015 despite more new supply.
- “Sought-after neighborhoods, including West Village, Chelsea, and SoHo, will perform well as rents soar, while new developments in Midtown West and the Financial District help boost rents at nearby properties,” Marcus & Millichap predicts. “The opening of the 903-unit New York by Gehry in Lower Manhattan has raised the bar for rents in the district.”
- Reis reports the average asking rent rose 1.3% in the second quarter, while the average effective rent increased 1.5% to $3,960 per month. This gain accounts for nearly all of the year-over-year increase.
- The 24,301-unit Midtown West submarket has a vacancy rate of 3.4%, the highest among the submarkets, and an average asking rent of $3,821 per month.
- The average asking rent rose 1.3% in the second quarter, and the average effective rent increased 1.6% to $3,744 per month. The year-over-year gains are 2.8% and 3.8%, respectively.
- The 600-unit second phase of Mercedes House completed construction in May, and the vacancy rate rose 40 basis points despite 485 units of net absorption. Another 122 units completed at 785 8th Avenue in July; nearly 5,000 are forecast to be added through 2016.
- The Related Cos. “has closed on $240 million in construction financing for a big residential development in Chelsea near the High Line,” according to Crain’s New York Business. “The 386-unit project at 500 W. 30th St. will have 77 permanently affordable housing units for low-income tenants. Those affordable apartments will be created through the city’s Inclusionary Housing Program, which is designed to incentivize developers to build affordable units in projects that are located in neighborhoods that are becoming increasingly expensive.”
- “The rezoning of Hudson Yards…has ignited a massive transformation of the neighborhood, where over 4,000 market-rate units have been completed since 2010,” according to Marcus & Millichap. “Builders recently broke ground on Gotham West, a $520-million residential development slated for the Far West Side. When completed in 2014, the project will add 1,200 units to the area.”
- The 16,044-unit Upper West Side submarket remains the city’s most expensive, with Reis reporting a monthly average asking rent of $4,333 per month. The vacancy rate is 2.5%.
- The vacancy rate decreased 10 basis points in the second quarter, and is down 110 basis points from a year earlier. The average asking rent increased 1.3% in the second quarter, and the average effective rent rose 1.6% to $4,189 per month. The respective year-over-year increases are high at 5.1% and 5.5%.
- No additional apartments are under construction here, and there are very few places where one could build.
- For the 16,237-unit Upper East Side submarket, Reis reports a vacancy rate of 1.0%, second lowest among the submarkets, and a $3,822 per month average asking rent.
- The vacancy rate decreased 20 basis points in the second quarter although net absorption was negative, as 65 units were converted out of the rental inventory.
- The average asking rent increased 2.5% and the average effective rent rose 2.9% to $3,812 per month. Compared with a year earlier, the vacancy rate is down 50 basis points, the asking average is up 4.3%, and the effective average is up 5.3%.
- Development activity is limited here as well, and has been since a 1980s condominium boom.
- The 22,654-unit Stuyvesant/Turtle Bay submarket has a vacancy rate of 2.5%, and an average asking rent of $3,820 per month.
- The vacancy rate decreased 10 basis points in the second quarter and is also down 40 from a year earlier. The average asking rent increased 1.5% and the average effective rent rose 1.8%, to $3,692 per month during the quarter. The year-over-year increases are 2.9% and 3.6%, respectively.
- In the 8,292-unit Morningside Heights/Washington Heights submarket, which includes the entire area north of 110th Street, Reis reports a vacancy rate of 2.1%, and an average asking rent of $2,241 per month.
- The 233-unit (185 market-rate) building at 10 E. 102nd Street completed construction in June, but net absorption was sufficient to push the vacancy rate down 20 basis points. The average asking rent increased 0.6% during the quarter, with the average effective rent up 0.8% to $2,150 per month. The year-over-year gains are 3.9% and 4.9%, respectively.
- There is just one 181-unit (144 market-rate) project remaining under construction in this submarket, with completion expected in 2013.
- “Investment activity will pick up in Uptown as smaller, private investors look to capitalize on the potential economic benefits from the expansion at Columbia University,” Marcus & Millichap expects. “Buyers will target properties below $10 million, make capital improvements, and market the updated units to the roughly 27,000 students who attend Columbia and university workers.”
- The 23,396-unit Queens County submarket has a vacancy rate of 2.2%, and an average asking rent of $1,524 per month, second lowest among the submarkets according to Reis.
- Relatively affordable Queens is catching up to the rest of the high-cost city. The average asking rent jumped 2.0% during the quarter and the average effective rent increased 2.1% to $1,496 per month. The year-over-year gains are high at 8.4% and 9.4%, respectively.
- The 345-unit 45-40 Center Boulevard completed construction in Long Island City, and the 82-unit The Elmhurst completed construction in Elmhurst Queens. The vacancy rate increased 50 basis points during the second quarter despite 302 units of net absorption.
- Two more large projects, the 820-unit 4545 Center Boulevard and the 709-unit Link Long Island City are still under construction in the Long Island City area, which would have been the home of the Olympic Village if New York City, rather than London, had been selected for the 2012 Olympics.
- On his weekly radio show, according to The Politicker, NYC Mayor Bloomberg said “It would have been wonderful, but we didn’t get it. But we didn’t go and cry. What we did is we built a very big percentage of the things we would have built anyways, if we had had the Olympics.” Hudson Yards in Manhattan was also part of the 2012 Olympics plan.
- “Multiple apartment projects are under way in Queens, particularly on the waterfront in Long Island City, where the massive East Coast community is being developed,” according to Marcus & Millichap. “The project consists of six towers totaling 2,800 market-rate units, with 840 apartments expected to come online this year, which could help boost rents at nearby complexes.” Permit activity is up 55.0% from a year earlier to 2,400 multi-family units over 12 months.
- “The residential property market in Queens is finally getting back in gear,” according to Crain’s New York Business. “In the second quarter, the median sales price rose 3.8%, to $355,000, from the same time last year” and the largest gain in six years. The median price for Brooklyn was $477,108, according to this source. Until the 1990s Queens was consider a middle class borough, and Brooklyn was consider poor.
- The 23,288-unit Brooklyn (Kings County) submarket has a vacancy rate of 1.7%, unchanged from the prior quarter, and an average asking rent of $1,635 per month, Reis reports.
- The average asking rent rose 1.3% during the quarter, with the average effective rent up 1.6% to $1,587 per month. The year-over-year gains are 3.7% and 4.5%, respectively.
- Two apartment projects broke ground during the second quarter: the 378-unit (234 market-rate) 388 Bridge Street and the 97-unit 30 Washington Street, both in DUMBO adjacent to lower Manhattan on the waterfront.
- Sales at Brooklyn’s new condominium towers are booming according to a report cited by the real estate blog Brownstoner. “Just four luxury projects—Edge, Northside Piers, One Brooklyn Bridge Park, and On Prospect Park—made up 45.0% of sales by dollar volume. Median price per-square-foot of sales at new condos increased 16% year-over- year, to $690.” One third of the sales were in Williamsburg. The lowest price was in Crown Heights at $300 psf.
- “Phoenix-like, the formerly troubled building on the Prospect Heights-Crown Heights border known as Hello Living Dakota and now renamed The Collection is ‘close to 70.0% sold,'” according to this source quoting Curbed “After everyone involved with Prospect Heights’ Hello Living Dakota sued each other, the building, at 904 Pacific Street, dusted itself off and tried a new marketing team and a new name, The Collection. That—and a round of $100,000 price cuts—seems to have done the trick.”
- For the 12,257-unit Bronx submarket Reis reports a vacancy rate of just 0.4%, lowest among the submarkets and unchanged from the prior quarter, and an average asking rent of $1,118 per month, also the lowest. Just 49 vacant apartments remained available in the last bastion of affordable market rate housing in New York City.
- The average asking rent fell 0.6% and the average effective rent fell 0.2% to $1,115 per month during the quarter. The year-over-year losses are 1.6% and 0.5%, respectively, despite low vacancy. Here, it seems, landlords are going for occupancy over rent gains.