Around the same month last year when the coronavirus pandemic first hit the United States, the government declared New York City as the center of the health crisis This lead massive renters to leave their apartments and flee in nearby suburban homes.
The majority of the rich and middle-class workers had the luxury to take their jobs at home, so they decided to work-from-home to ensure their safety. As a result, New York apartment vacancy rates are up by 40% in just a snap.
2020 Struggle
The year 2020 is has been challenging for rental, residential, and commercial property owners in New York. The lack of tourist and office employees lead to an all-out downfall for real estate investors.
New York landlords tried to find ways to make ends meet. Due to desperate times, some apartment owners had to offer months of free rent to encourage tenants to commit to a lease.
In December 2020, Manhattan apartments had a median rental price of $2,800 a month, which is a 17.3% down from the record last year. The vacancy rate also remains at 5.5%, considered the third-highest on New York's record.
Commercial real estate in the Manhattan business district also experienced a downfall. It now has the most available office space since 2003. Commercial property sales also declined by 50 percent.
New York Real Estate Comeback
As the vaccine against COVID-19 begins to roll out in the city, New York is slowly recovering from the pandemic coma.
According to a rental market report by real estate giant Douglas Elliman, there is a major surge in leasing activity as renters slowly go back to work in the city.
Appraiser Jonathan Miller, whose firm provided the report for Douglas Elliman, said that the earlier prediction that Manhattan would be a "bleak dystopian" hellscape after lockdown should be updated.
"The market return is predicated on consumers feeling safe in the city. There has been notable progress on that in recent months as the vaccine distribution has surged and infection rates have fallen sharply," Miller said.
The rental market report shows that landlords continue to drop rent rates and double their concessions offer with two or more months rent-free. This resulted in a 112.4 percent increase in signed leases compared to the record last year.
Meanwhile, Douglas Elliman's executive manager of leasing Hal Gavzie told Real Estate Weekly that the drop in rent rates and inviting concessions has contributed to the monthly leasing volume increase since the fall.
"It looks like the rent reductions have now stabilized and, barring any unknown scenario, it is all heading in the right direction," Gavzie said.
He is also confident that the numbers will continue to improve as soon as the city's tourism and recreation are back.
"With the vaccine rollout well underway, people are getting more comfortable and the city is getting busier. So much is tied to the commercial component but, as the restaurants, arts, and theaters start to reopen, I am optimistic that we will have a nice velocity in the market this summer as people seize this opportunity in the market," he added.
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