We’ve already written extensively about scarcity in the rental inventory in Manhattan. A lack of available apartments will be one of the dominant themes of 2012, mostly due to economic uncertainty. The current economic climate has had the dual effect of preventing developers from constructing new buildings, and pushing people who would otherwise buy condos into the rental market. Yesterday the Wall Street Journal published figures that quantify the market’s scarcity. There will be roughly 2,230 apartments for rent in Manhattan that will go on the market this year, the lowest amount since 2005, when the figure was first counted. And the vacancy rate for all luxury rentals in Manhattan is 1.27%.
A vacancy rate that low spells great news for landlords, provided they’re one of the lucky few who have something to lease. We wrote last month about two apartment buildings scheduled to open this year: the Windermere, a pre-war conversion on 92nd Street in the Upper West Side, and 396 Broadway in Tribeca. The Wall Street Journal points to two more: a building on 102nd Street and Park Avenue, that will bring an additional 232 units to Manhattan, and a building on John Street that will bring 418. Potential renters have been flocking to all of them.
After the market crash in 2008, developers put a freeze on many of their construction projects, and implemented a sort of moratorium on new construction projects. The lack of inventory is an effect of that market freeze. The existing buildings have all filled up, and there haven’t been new buildings constructed that can offer alternatives. Thus we’ve seen rents priced much higher than they normally are. But over the past two years, as the market has recovered, we’ve seen a continuation of new construction. This means that if renters can wait a few years inventory levels should be headed back to normal. Optimistically, we can expect this to happen by as soon as late 2013. Until then, we recommend renters check out apartments in the Financial District, which has a higher vacancy rate than any other neighborhood in Manhattan.
