Apartment vacancies at 10-year high in NY

The number of vacant apartments in New York City, especially in Manhattan, is at the highest level in a decade as many people have fled the city amid the coronavirus pandemic.

In July, the Manhattan rental inventory increased 65 percent compared with the same period a year ago, and citywide vacancies rose 52 percent, real estate brokers said.

That means many vacating renters aren't being replaced by new tenants. Continued high vacancies may create an obstacle to reviving the city's economy because retail sales and tax revenue are likely to continue to fall.

More vacancies mean lower rents for those seeking apartments, but there are fewer apartment-hunters than usual. That has forced landlords to scramble.

"We're stuck with inventory," said Merih Morgan, owner and broker at City Zen Realty in Manhattan. "Landlords are hurting. Everything is being renegotiated－even the broker's fee. This is a big-time buyers' market. Renters can easily get 20 percent off."

StreetEasy said an additional 67,300 apartments or so were available in July, the largest number seen for one month since the company began tracking available rentals in 2010. The number topped June's 52,700 vacancies.

There appears to be no immediate relief in sight. Many people are working from home, eliminating the need to be close to the office and undercutting demand for apartments, especially in Manhattan and Brooklyn.

The unemployment rate in New York City rose to 20.4 percent in June from 18.3 percent in May, the United States Bureau of Labor Statistics reported.

The Partnership for New York City said about 33 percent of the city's small businesses may never reopen. So far, the sector has lost about 520,000 jobs.

"High unemployment leads to higher vacancy rates as the New Yorkers who can no longer afford to live in the city, or who moved to the city for work, increasingly move away," said Nancy Wu, an economist for StreetEasy, in a report.

"Higher vacancy rates translate into lower demand for the rental inventory piling onto the market as leases expire throughout the summer.

"As demand continues to decrease while supply increases－and there are many reasons to believe these trends will continue－rents are likely to fall more than they did during the Great Recession (of 2008-09.)"

There was some good news: Amazon announced plans this week to create 2,000 jobs in Manhattan for employees who will work at the former Lord &Taylor department store building on Fifth Avenue in midtown Manhattan.

High-income residents, especially those with children, are fleeing the city for the Hamptons on Long Island, Westchester County, the Hudson Valley, Connecticut or New Jersey. That activity punches a hole in the luxury rental market, especially apartments renting for $10,000 or more a month, brokers said.

Brenton Raymond, a licensed broker with Oxford Property Group, a division of Pegasus Equities in Manhattan, said he is confident the rental market will recover.

"People want to get out of Dodge," he said. "But I think they'll come back because of the intellectual capital in New York."