Vacancies in Manhattan Reach an All-Time Low

A few days ago, the second quarter real estate report for U.S. rentals was released, providing plenty of information on the national housing market. The verdict: rents have increased to an all-time high, particularly in New York City. Additionally, demand is at an all time-high. But the most staggering statistic at all is that the U.S. vacancy rate has sharply decreased to a level that hasn’t been seen since 2001. The report has several implications for the Manhattan market, beginning with the fact that in New York City, average rents are now at $2,935 per month, 1.7% more than last quarter.

The Wall Street Journal reported that the percentage of Manhattan rental vacancies is currently at 4.7% this second quarter—remarkably lower than the 9.6% vacancy rate in 2012’s first quarter. These numbers, of course, mean higher demand. But what else do they mean? First of all, rent prices will continue increasing, which is the natural thing for landlords to do when supply is low and demand is high. Although Manhattan apartments for rent are in shortage, the fact that cities aren’t clamoring to open up new apartment units is, in fact, a benefit. Opening too many apartment units at once means the numbers will be reversed—demand goes down, which could then lead landlords to make concessions to attract buyers. Too many options is just as much of a hazard as too few. Nonetheless, there will be no danger of the vacancy percentage later dropping to an even lower number that would leave potential renters homeless.
Moreover, the state of the rental market is an advantage not just to landlords but to the lucky few Manhattan apartment renters this quarter who find units that open up. Units may be limited but purchasing homes could be riskier, considering that lending practices are now tighter than ever and renting is a good way to avoid expensive down payments for condo listings. What’s more, with job insecurity as a rising concern for young and old alike—and particularly in a place as competitive a job market as in Manhattan—temporary housing is a necessity of life. Real estate’s stronger focus on the rental market over the condominium market serves to accommodate the change in young professionals’ lives.