A famous scene in a 1980s Woody Allen film features two real estate agents trudging toward each other from opposite directions in the desert. Both appear battered, their clothes frayed, their hair and beards unkempt. When they meet, one asks, “How’s business?” “Great,” replies the other. “Me too,” says the first - then they continue on their respective ways.
This scene was played for absurdist comedy of course, but it may hit uncomfortably close to home given the the state of the apartment market for co-
op, condo, and rental units in New York City in the wake of the ongoing COVID-18 crisis. Ask any broker today how the market is faring (and we did!) and they’re likely to tell you everything is fine.
But is that perhaps wishful thinking? The first hard statistics on vacancies, values, and other measures of market health are beginning to sift in, primarily for rental units, and the trajectory is pretty decisively in a downward direction. The question is whether the trends we are seeing in the rental market will also hold true for co-op and condominium units.
Rentals - the Canary in the Coal Mine?
Jonathan J. Miller, President and CEO of Miller Samuel, a nationwide real estate appraisal and consulting firm based in New York, observes that “According to our research, Manhattan rentals have declined 10% - the largest drop in 14 years, I believe. It also has the highest vacancy rate in 14 years, with concession market share rising and concessions rising. The declines are deeper in lower-priced units because unemployment is heavily skewed towards lower wage earners. The rental market is therefore more vulnerable than the sales market.”