January Edition of Elite Rentals

White House Value Drops

It just goes to show you, not even the president is immune to the real-estate slump.

As analysts slice, dice, mince and wedge the president’s first year in office, Zillow.com decided to take a look at his property’s performance, and found that the value of 1600 Pennsylvania Avenue has dropped by $15.6 million, or 5.1 percent in the past year.

The 132-room, 55,000-square foot home, which includes an underground bunker, was recently valued at $292.5 million, down from $308.1 million a year ago and $331.8 million in 2008, Zillow reports. (View the Zillow listing.)

That’s despite improvements the Obamas made in the past year, such as adding a vegetable garden and a fancy swing set — not to mention all the celebrities who’ve graced its halls, including Microsoft  chief Bill Gates, Goldman Sachs  honcho Lloyd “I’m doing God’s work” Blankfein, and her O-ness, Oprah Winfrey.

Now before you go blaming Obama’s health-care reform plan or his crackdown on Wall Street bonuses for the declining value, consider that the Zillow home-value index, which measures the value of homes across the nation, was also down 5 percent in the past year.

And, it’s an improvement from when the home’s value dropped more than 7 percent during the prior year—while a certain Texan with very different politics resided there.

Still, it’s tough to cope with declining real-estate values. Do you think Obama’s contacted his bank about refinancing?!

By: Cindy Perman
Writer http://www.cnbc.com/id/34956652

NYC’s Top 10 Most Expensive Rentals

It’s no secret that many top-notch New York City sales brokers took on pricey rentals last year because high-end apartments were slow to sell.

But with the economy struggling, did the high-end rental market fare any better than the sales market? Were celebrities still willing to pay top dollar for temporary Manhattan pads? And did struggling corporations change their tactics in renting out apartments for top executives?

This month, The Real Deal chipped away at the notorious lack of transparency in the rental market (unlike sales, rentals are not publicly recorded) and looked at both the priciest rental listings, which were provided by the real estate Web site StreetEasy, and closed deals, which were supplied by brokerages and agents.

According to StreetEasy, the 10 most expensive rental listings on the market in Manhattan late last month ranged from $60,000 to $140,000. Some 38 listings priced over $50,000 per month hit the market at some point in 2009, up from 31 in 2008, suggesting that more high-end sellers are listing their homes for both sale and rent because of the tough economy.

The agents who listed these über-expensive rentals reported that wealthy renters, like other consumers, became more price-sensitive as layoffs climbed and the stock market went on a wild ride. Much like the high-end sales market, prices for high-end rentals dropped precipitously in 2009. Brokers estimated that rents across the top of the market have fallen between 15 and 50 percent from the peak, depending on the neighborhood and apartment type.

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They say they’ve seen a slight improvement in activity and pricing in recent months, but it will likely be a long time before prices climb back to where they were during the boom.

“These rentals are deeply discounted,” said Victoria Shtainer, a senior vice president at Prudential Douglas Elliman. “They would have gone for a lot more money even a year ago.”

Indeed, at the end of 2009, the most expensive rental listing on the market was the Cole Porter Apartment at the Waldorf Towers, which was listed at $140,000. A year earlier, in December 2008, the most expensive rental on the market, PH3132 at Trump Park Avenue, was priced 42 percent higher, at $200,000.

Even then, the 6,200-square-foot duplex Trump penthouse, with multiple private terraces, was described by the blog Curbed.com as “insanely overpriced.”

Shtainer, who was marketing the listing at the time, said she tried unsuccessfully to convince the Trump Organization to lower the asking price in the wake of the Lehman collapse.

“After the market went down, I didn’t have many requests for rentals,” she said of the apartment, which at the time was also for sale for $51 million. “People weren’t going to spend this kind of money.”

The penthouse failed to move. In July the listing was handed over to Adam Modlin of the Modlin Group and its prices were slashed to $100,000 per month for rent — making it the third most expensive listing on the market at the end of last year — and $31 million for sale. Modlin, who called the apartment “probably the most spectacular listing in New York City,” told The Real Deal he currently has an offer for rent at the asking price. As of press time, the deal hadn’t yet gone through.

The Trump price chop made the Waldorf Towers’ Cole Porter Apartment the city’s most expensive current rental listing. The Waldorf Towers, where John and Jacqueline Kennedy spent their wedding night, is a boutique hotel-within-a-hotel, occupying the 28th through 42nd floors of the Waldorf Astoria. The Cole Porter Apartment is one of the Waldorf Towers’ residences, a collection of one- to six-bedroom units with adjustable floor plans that can be leased from one month to five years, explained listing broker Margaret Bay of Brown Harris Stevens.

While the apartments offer hotel services, “they’re designed to be residences,” Bay said. “They’re very large, grand apartments.”

The Cole Porter Apartment is the 6,000-square-foot suite of rooms where the composer lived for 30 years. It’s listed as a six-bedroom at an asking rent of $140,000, but the size of the suite can be adjusted by subtracting bedrooms, Bay said.

This year, the most Bay rented it for was $95,000 (as a four-bedroom). As far as she knows, that was the most expensive rental deal of 2009. Still, it’s down from recent years, when she rented it for its full price of $140,000.

Another one of the Waldorf’s residences — #36A — was rented as a two-bedroom several months ago for $50,000, Bay said. The deal was also one of the priciest of the year, but Brown Harris Stevens declined to say where it ranked in relation to its other top rentals.

The celebrity-friendly Waldorf Towers is always in demand and tends to be somewhat resistant to market fluctuations, Bay said. Nonetheless, the residences have made some price concessions since the Lehman crisis.

“There has been a downward change to meet the needs of what’s going on in the market, but not dramatically,” Bay said, adding that she’s noticed fewer long-term stays in the residences, with more tenants choosing three- to six-month leases over yearlong leases.

Five-figure discounts

Few high-end apartments last year secured their asking rents.

Prudential Douglas Elliman’s largest rental deal last year was a fully furnished townhouse at 178 East 75th Street, which Elliman executive vice president Michael Kotler rented for $42,500 a month. It had originally been listed for $50,000; it was then reduced to $45,000.

The renters were a European family with three children who moved to New York for a one-year work assignment, Kotler said.

Though he did not disclose the identity of the house’s owner, property records show that it’s owned by Israeli-born sculptor and jewelry designer Ilana Goor and her husband, Leonard Lowengrub. The two run the Ilana Goor Museum in Israel.

In Stribling’s most expensive deal of the year, brokers Alexa Lambert, Tim Desmond and Linda Melnick rented a four-story apartment at 807 Park Avenue for $40,000 per month. The last time the unit was rented, in 2008, it went for $55,000, Desmond said, adding that he and Lambert rented another apartment for $38,000 at the three-unit building also.

Another of the year’s most expensive rentals was at the Belnord at 225 West 86th Street, an Extell building. There, a 5,000-square-foot duplex penthouse with a terrace was rented for $38,000 a month this fall, according to Hedi Well, the leasing and property manager for the building.

Citi Habitats would not disclose its priciest rental of 2009, citing a confidentiality agreement, but said its second most expensive deal of the year was brokered by Anthony Cangemi, who rented a Midtown East five-bedroom duplex for $25,000 per month to another family who moved to New York temporarily for work.

Shtainer said that in this market, “everything has been discounted.”

“If you’re overpriced, no one comes to see your listings,” she said.

Even the wealthy have been looking to curtail unnecessary spending in the current uncertain climate.

“There’s a point at which even the rich are not going to splurge on extra items,” said Charlotte Van Doren, a senior vice president and associate broker at Stribling.

Van Doren, along with Corcoran’s Jared Seligman, rented the 1 Morton Square penthouse owned by actresses Mary-Kate and Ashley Olsen at the beginning of last year for $35,000. The home, which was also for sale, had previously been listed for an asking rent of $50,000 per month.

Changing behaviors

Though not as active as it was during the boom, brokers agreed that there is activity in the high-end rental market, underpinned by corporate relocations.

Before the financial crisis, Midtown law firms and hedge funds willingly paid top dollar to house new executives near their offices.

Amid the recession, however, “corporations slashed those budgets,” said Van Doren, who frequently works with furnished high-end rentals in Midtown, a market in which she said prices have dropped between 30 and 50 percent from their peak.

Corporate relocation budgets once averaged around $10,000 a month, plus the cost of brokers’ fees, Van Doren estimated. In 2009, they fell to around $6,000, with brokers’ fees no longer included.

“Corporations said, ‘Those rents look too high, and we’re laying off workers; what are we doing bringing people in from out of town? We don’t even know if we’re going to be in business,'” Van Doren said.

Pied-à-terre renters with discretionary income also changed their habits last year, she said.

Two years ago, for example, Van Doren rented a $12,000-per-month apartment to a Texas banker and his wife, who frequently visited the city to see Broadway shows. That couple did not renew their lease, she said, and others like them became rare.

“That market has completely disappeared,” Van Doren said.

Shtainer said she, too, has noticed a difference in the renters of high-end apartments: High rollers seeking showy crash pads have been replaced by local and international families looking to take advantage of good deals to upgrade their primary residences.

Meanwhile, higher inventory levels are also impacting pricing.

“There are a lot of apartments available for rent, more so than there is a demand,” said Elliman’s Peter Costas, who represented the owner of a three-bedroom penthouse at 101 West 67th Street, which recently rented for a short-term lease of $25,000 per month. The apartment is also for sale for $8.2 million, he said.

But while there are more pricey rentals available than in the past because of the lower pace of sales at the high end, “there’s not a glut,” said Jonathan Miller, president of appraisal firm Miller Samuel.

Like Costas’ client, an increasing number of homeowners started putting their apartments on the market for both sale and rent last year, hoping to make some extra income while they wait out the market.

“The thought of selling for a loss could be difficult. They’re thinking, ‘Maybe if we rent it for a year or two and see what happens, we may be able to turn the sale around,'” said Chris Halstead, a sales agent at Halstead Property and nephew of company founder Clark Halstead.

This summer, the younger Halstead represented the owner of a four-bedroom townhouse at 178 East 64th Street that went for the asking rent of $35,000 per month — the firm’s largest rental deal of the year. The listing had been on the market for a year when Halstead got it, and he convinced the owner to drop the rental asking price from $40,000 to $35,000.

The house was also listed for sale at $15.7 million, and the tenants considered buying but ultimately felt more comfortable renting, Halstead said.

“There are a couple of deals I’ve done recently where people have decided to rent for a year to see where the market goes,” said Bond New York’s Tommy Doyle. This year, Doyle represented the renters of #54E at 10 Barclay Street in Tribeca. In Bond’s priciest rental deal of the year, the three-bedroom was leased for $27,500 a month.

Some home seekers prefer to rent because they are loath to part with large amounts of liquidity in the current climate.

“In their mind, they can keep their money invested doing other things,” said Doyle.

Concessions also played a role this year in very high-end rentals, according to Susan Forrest-Reynolds, a broker at Charles Rutenberg Realty.

Forrest-Reynolds completed Rutenberg’s largest rental transaction of the year, in which her clients leased a 2,500-square-foot three-bedroom at the Grand Tier at 1930 Broadway near Lincoln Center. They paid a net effective rent of $19,500 after receiving one month of free rent from the landlord, Glenwood Management, who also paid the broker’s fee.

The added concessions helped push her clients toward this rental, Forrest-Reynolds said. “They were going to rent from someone else at a condo and pay a full fee, so this was a fabulous deal for them,” she said.

Brokers say conditions for high-end rentals are improving, a trend they expect will continue this year. “Since early fall, there’s been an enormous increase in activity,” said Bay.

Van Doren said corporate relocation budgets that had fallen to $6,000 are now back up to around $6,500, and companies have started paying brokers’ fees again.

“There’s a little bit of an increase,” Van Doren said. Thanks to rising unemployment and continuing economic turbulence, however, “it’s going to be a long time before we see that apartment that’s renting for $6,500 renting for $10,000 again.”

http://therealdeal.com/newyork/articles/ranking-the-top-rentals

Baby Boomers becoming Buyers in NYC

When Core’s Kirk Rundhaug started marketing 32 Clinton Street, a four-unit boutique condo in a far-flung corner of the Lower East Side, he was somewhat surprised at who showed up at his open houses.

In addition to the young hipsters generally associated with the edgy neighborhood, Rundhaug fielded inquiries from empty nesters from the suburbs of New Jersey and Connecticut.

“They were Lower East Side people when they lived in New York,” he said of one 60-something Westchester couple who are eyeing a two-bedroom unit. “They want to come back.”

Manhattan’s population of people aged 65 and older is expected to surge nearly 60 percent by 2030 as the baby boom generation ages. And while boomers had largely disappeared from the city’s real estate market in the wake of the financial crisis, brokers say this all-important demographic is now becoming active again.

With prices no longer in free fall, many of the city’s boomers are now putting their sprawling apartments and townhouses on the market as they look to downsize to one- and two-bedroom homes. Meanwhile, suburban empty nesters are also reentering the market with an eye toward eventually retiring in the city, exchanging large, labor-intensive houses for apartments rich in services.

Already, the preferences of these buyers and sellers are shaping the market in some neighborhoods and buildings, experts say, and will increasingly sculpt the next generation of real estate sales.

“They’re selling their houses in Connecticut, New Jersey and Westchester, and they’re all moving back,” said Rundhaug, who recently sold two apartments to an empty nester who bought one for himself in Soho and another for his son on the Upper East Side.

“They don’t need the big houses anymore.”

The term ‘baby boomers’ refers to anyone born between 1946 and 1964, during the explosion of more than 77 million births that followed World War II. As the oldest of this generation approaches retirement, the number of people over 65 in Manhattan is projected to rise to 295,000 by 2030, up 57.9 percent from 2000, according to city data.

Wealthier and more active than previous generations of retirees, many boomers are looking to retire in urban settings — for at least part of the year — rather than decamping to warmer climates, according to Paul Bishop, the vice president of research at the National Association of Realtors, which published a 2006 study called “Baby Boomers and Real Estate.”

“Boomers are looking to move back into an urban setting after years in the suburbs,” said Bishop, noting that cities like New York are attractive because they offer easy access to public transportation, health care, culture and restaurants.

Despite these factors, boomers largely disappeared from the New York City real estate market after the financial crisis of 2008, licking their wounds from heavy losses in home equity and their stock portfolios.

“This is a very cautious population when it comes to spending their savings,” noted Jessica Cohen, a senior vice president at Prudential Douglas Elliman.

However, brokers said, now that the stock market has recovered, boomers are returning to the market.

“I’m seeing them again,” said Cohen, who recently met with an empty nester interested in a co-op at 140 West 69th Street, a doorman elevator building popular with suburban baby boomers because it’s near Lincoln Center and allows pied-à-terres.

Cohen, who specializes in the Lincoln Square area, said empty nesters are becoming an increasingly crucial part of her business.

“In this neighborhood, that is definitely a huge piece of my target population that I don’t see as much in other areas,” she said. In order to reach baby boomers, she often runs ads in the New York Times, rather than online as she does to target younger buyers.

“I can get more of the tri-state empty nester market by advertising with a print ad,” she said.

Many of these buyers want to take advantage of the discounts in the market, said Charles Homet, a senior vice president at Halstead Property.

“For these people, this is maybe the last purchase that they’re going to make. This is an opportunity to get in at a good price and keep their costs low,” Homet said.

He recently sold a classic six on Washington Square West to a baby boomer couple downsizing from a spacious Gramercy duplex. “They realized that upstairs-downstairs living was not going to work for them long-term,” he said.

At the Kalahari, a recently completed condo at 40 West 116th Street in Harlem, a baby boomer couple recently bought a home after selling their pied-à-terre on East 86th Street, after complaining that the Upper East Side felt “sterile,” said Lisa Gomez, the executive vice president at L+M Development Partners, the Kalahari’s developer.

The number of baby boomers buying and selling homes in the city will only grow in years to come, brokers said.

In the next 10 years, the number of boomers looking for New York real estate “could very well increase,” said Elaine Clayman, a broker at Brown Harris Stevens.

In the meantime, boomers are also having a growing impact on the supply side of the market, said Clayman, who currently has eight signed contracts from boomers selling their homes, either departing for other areas of the country or downsizing in the city.

Now that transactions have picked up after the deep freeze that followed the financial crisis, baby boomers have begun putting their homes on the market again, Clayman said. While they are disappointed that prices have fallen, many purchased their homes long ago and still stand to make significant profits.

“I’m finding that they’d rather sell than take a chance [that prices will fall further],” she said. “They want to move on.”

Townhouses are one area many boomers are abandoning for more retirement-friendly homes with doormen and elevators. Cohen said her parents recently traded their 16-room house in Brooklyn for a one-bedroom condo with an alcove at 3 Lincoln Center on 66th Street.

Experts said boomers often seek two-bedroom homes, or one-bedrooms with a “flex room” that can be used as a guest room. Developers are already starting to respond to this trend, according to Andrew Gerringer, managing director of the Prudential Douglas Elliman Development Marketing Group. He said that’s the reason “flex rooms” can be found in projects like Midtown South condo conversion 76 Madison Avenue and Barbizon/63 in Lenox Hill, which Elliman marketed.

With boomers increasingly unloading larger homes, will the next generation inherit an oversupply? It’s possible, experts said.

“I think the concern is, when the baby boomers sell, who buys?” said Jonathan Miller, the president of appraisal firm Miller Samuel. “It’s a population bubble that went through the pipeline, so you physically have more [baby boomers] than the buyers behind them. I think that will be an across-the-board phenomenon.”

http://therealdeal.com/newyork/articles/baby-boomers-become-buyers

Press Clips from Q4 – NYC Rental Market

Manhattan Apartment Rents Drop 9.4% as City Job Losses Mount

January 14, 2010

Manhattan apartment rents dropped 9.4 percent in the fourth quarter of 2009 from a year earlier as Wall Street jobs vanished in the recession.

The median rent fell for all apartment sizes except two- bedrooms, which were little changed, according to a report today by broker Prudential Douglas Elliman Real Estate and appraiser Miller Samuel Inc. A separate tally by broker Citi-Habitats Inc. showed the average apartment price declined 7.3 percent for the year. The company didn’t report medians.

New York City lost 25,200 finance jobs in the 12 months ended Nov. 30 and the unemployment rate climbed to 10 percent, curbing tenants’ appetite for bigger and more expensive apartments. Joblessness also forced landlords across the U.S. to cut prices as the nationwide vacancy rate reached a record 8 percent in the fourth quarter, New York-based research firm Reis Inc. said Jan. 7.

“I don’t think you’re going to see a significant improvement, if any, in 2010, with unemployment in the 10 percent area,” Miller Samuel President and Chief Executive Officer Jonathan Miller said in a telephone interview.

The effective decline in Manhattan apartment costs was likely greater than either broker reported because the figures don’t reflect concessions such as a free month’s rent, Miller said.

About half of 2009 rentals came with such enticements, said Citi-Habitats President Gary Malin.

“These days, the landlord’s goal is to get tenants,” Malin said.

Prices by Size

The median rent for a Manhattan studio fell 8.5 percent in the fourth quarter from a year earlier to $2,100, Miller reported. One-bedrooms declined 11 percent to $2,850; two- bedrooms cost $4,700 a month; and three bedrooms were down 18 percent to $6,588.

Luxury prices were little changed at $8,663, Miller reported. Many people in that price bracket sold co-ops or condominiums and waiting to buy again, said Shelley Saxton, a broker for Brown Harris Stevens.

“They want to be in a position they can pull the trigger and buy,” Saxton said. “For now, they’re sitting on the sidelines.”

The time apartments spent on the market declined 22 percent to an average of 76 days, Miller said.

Manhattan’s fourth-quarter vacancy rate fell to 1.76 percent from 1.96 percent, Citi-Habitats said.

The company used its own data and counted more than 2,600 deals during the quarter. Prudential Douglas Elliman and Miller Samuel culled their information from 2,456 transactions recorded by the Real Estate Board of New York, a trade organization.

Transactions Rebound

Transactions recorded by Rebny jumped almost 48 percent in the fourth quarter from a year earlier, just after Lehman Brothers Holdings Inc. filed for bankruptcy.

“We’re seeing consumers come back because they’re taking advantage of lower prices,” Miller said. “We’re not arguing that Manhattan is an inexpensive place to live, but relative to what it was, rents are less.”

Citi-Habitats reported a 30 percent increase in rental transactions.

The company handled almost 13,000 rentals in 2009, including almost 2,000 newly built apartments, said Clifford Finn, managing director of new development for the brokerage.

The company’s largest project was Silver Towers, a 1,254- unit complex at 620 W. 42nd St. developed by Silverstein Properties Inc.

Silver Towers features a 24-hour concierge, valet dry cleaning, a fitness center and 75-foot indoor pool. Rents for one-bedroom apartments in the 60-story tower start at $2,965, with the first two-months free on a 14-month lease, Finn said.

SoHo Rents Highest

The SoHo/TriBeCa neighborhood had the highest rates in Manhattan, with one-bedroom apartments averaging $3,145 a month, Citi-Habitats said. SoHo/TriBeCa also had the lowest vacancy rate at 1.05 percent.

Miller, who divided Manhattan into four quadrants, reported the West Side had the highest median rent at $3,495, up 5.9 percent from the fourth quarter of 2008.

Rents fell 19 percent to a median of $2,600 on the East Side between 42nd and 96th streets. Downtown rents dropped 7.7 percent to $3,000, Miller said.

  

 THE REAL DEAL

Manhattan rental deals up in 4Q: reports

January 14, 2010  By Candace Taylor

Manhattan rental transactions surged in the fourth quarter of 2009, according to market reports released by two large city brokerages today (see full reports below).difficult to obtain, firms use different data to compile their reports.) Moreover, listing inventory dropped 21 percent to 5,255 units, from 6,640 during the fourth quarter of 2008, according to the Elliman report, which was prepared by appraiser Jonathan Miller, president and CEO of real estate appraisal firm Miller Samuel.

A marketwide report released by Prudential Douglas Elliman estimated that the number of rental deals in Manhattan leaped 47.6 percent to 2,456 in the fourth quarter, from 1,665 in the same period of 2008. Citi Habitats, the city’s largest rental brokerage, said it did more than 2,600 transactions in the fourth quarter, an increase of 30 percent from roughly 1,800 in the prior-year-quarter.

(In a market where rental data is notoriously

The upswing in activity “is a positive development, and we’ll take it,” Miller said, though he noted that the fourth quarter of 2008 saw particularly low levels of activity because of the Lehman Brothers collapse.

“There was clearly a surge in activity coming from a very low point from this time last year, which was post-Lehman,” he said.

Rental prices, meanwhile, are lower than last year, but not drastically so.

Elliman’s report pegged the average monthly rent of a Manhattan apartment at $3,789, 4.3 percent less than $3,958 in the same quarter of 2008 and roughly on par with third-quarter 2009. The median rental price was $2,900, the report says, dropping 9.4 percent from $3,200 in the prior-year-quarter and 1.7 percent from the previous quarter.

“There’s still weakness out there, but the rate of decline has eased to the point where we’re arguably approaching stable ground, for now,” Miller said.
Citi Habitats, which only tracks apartments rented by its own agents, said average rents fell between 5.8 and 7.3 percent year-over-year, and dipped 1.5 to 3.3 percent from the third quarter.

Neither of the reports account for the incentives that tenants are frequently offered in the current market, like months of free rent or waived brokers fees. Both Miller and Gary Malin, president of Citi Habitats, agreed that if those factors had been taken into consideration, rents would appear considerably lower.

“If you factor in owners’ concessions, rents are probably down 10 percent,” Malin said.

He attributed the uptick in rental activity largely to lower prices and the continuing popularity of these incentives, which helped persuade some renters to move to the city or upgrade to larger apartments.

“The incentives really played an enormous role,” Malin said.

Still, Miller noted, market wide rental activity is far down from the peak, largely because unemployment continues to hover around 10 percent.

His report, for example, found 3,535 rental transactions in the fourth quarter of 2006 — 30 percent more than the same quarter of 2009. The average number of units rented per quarter over the past decade, according to his data, is 4,155.

“We’re definitely getting better, but we’re still not where we were several years ago,” he said. “And that 10 percent [unemployment rate] is what needs to change before you see more rental activity.” 

CRAINS NY BUSINESS

Average Manhattan rents dropped 4% last year

By Amanda Fung

Published: January 14, 2010 – 10:51 am

Manhattan apartment rents ended the year down 4% from where they started 2009, but that decline helped to strongly boost the number of new leases signed, according to two market reports released Thursday.

In the final quarter of 2009, the average rent fell to $3,789 down 4% from the same quarter of 2008, according to Prudential Douglas Elliman and appraisal firm Miller Samuel Inc. That figure does not take into account rent concessions.

A second report painted a bigger dip in rents. According to figures from CitiHabitats, the city’s largest rental brokerage, prices in the fourth quarter averaged 7% less than those of a year earlier. Factoring in common landlord concessions, including one to two months free rent, that drop may be as much as seven percentage points more.

However, CitiHabitats also noted an improvement in the final quarter. According to its figures, rents “saw only nominal decreases” from the previous three months. The Elliman and Miller Samuel report showed a tiny, 0.8% rise from the previous three months.

“Average rents are flat. That is what we expected,” said Stephen Kotler, executive vice president of Prudential Douglas Elliman. “There was not much pressure up or down.”

Since rental transaction activity is not public information and is sometimes not shared among different brokerage firms, data trends differ and can be hard to discern, explained Jonathan Miller, chief executive of Miller Samuel. But both reports indicate a glimmer of hope for the rental market.

In a positive sign, the number of apartment leases signed in Manhattan rose 47.5% to 2,456 during the quarter, compared with the same period a year ago, according to Miller Samuel. Meanwhile, CitiHabitats, which compiles its data based on its own closed transactions, reported at least a 30% increase for the quarter. CitiHabitats logged in more than 2,600 deals during the fourth quarter.

“The rental market is stabilizing,” Mr. Miller said. “Just like the sales market, the rental market was unusually robust at the end of the year, but still is generally weak compared to historic norms.”

People took advantage of the incentives and moved to better apartments, Mr. Kotler said. The influx in new rental buildings in Manhattan gave people the opportunity to upgrade. About 3,500 new rental units came onto the market last year, said Gary Malin, CitiHabitat’s president.

The new product pushed rents down last year, giving people an opportunity to move. For instance, people who rented a Murray Hill apartment for roughly $3,200 a month moved to the Upper West Side, a block away from Central Park, for a hundred dollars more, when factoring in free rent concessions, Mr. Kotler said.

But despite the uptick in rental inventory, the absorption of these apartments was positive, especially toward the end of 2009. For the first time between November and December there was a slight decline in vacancy rates, Mr. Malin said. The holidays, cold weather and vacation schedules typically result in a rise in vacancy rates. Instead, vacancy rates dipped slightly to 1.83% last month from 1.87% in November. “The fact that it went down is a good sign,” he said.

Experts remain cautiously optimistic about this year as the unemployment rate, which has a huge impact on the rental market, remains high. “We are looking for more of the same in the first half of 2010—stable activity and pricing,” Mr. Miller said.

 RUETERS

 Manhattan apartment rents and vacancies off in ’09

NEW YORK, Jan 13 (Reuters) – Vacancy rates for apartments in New York City’s borough of Manhattan, the largest U.S. apartment market, declined in 2009, as lower rents and better landlord incentives attracted tenants, according to a quarterly brokerage report.

Average Manhattan rents fell about 7 percent last year from 2008. And when incentives like a free month’s rent are factored in, effective prices were down as much as 14 percent, said the report by CitiHabitats, a residential New York City broker that closed on about 13,000 rental deals during the year.

Large apartment landlords such as Equity Residential (EQR.N), AvalonBay Communities Inc (AVB.N), Essex Property Trust Inc (ESS.N), UDR Inc (UDR.N) and Post Properties Inc (PPS.N) have reduced rents and offered perks to retain and attract tenants.

The average Manhattan rent for a studio apartment was $1,800 in the fourth quarter of 2009. A one-bedroom rented for $2,400, a two-bedroom for about $3,400, and three-bedroom apartments went for about $4,600 a month, on average.

Manhattan’s apartment vacancy rate rose slightly during the quarter but remained below 2 percent. Rental vacancies peaked at nearly 2.5 percent in February 2009.

The U.S. vacancy rate hit a nearly 30-year high of 8 percent in the fourth quarter, according to real estate research company Reis Inc, reflecting continued high unemployment

CitiHabitats noted that Manhattan vacancies typically increase from November to December, but the opposite happened last month, suggesting the market has stabilized. It also said price changes have been “minor” for the past nine months, evidence that pricing has found its footing.

Vacancies are highest on the Upper East Side and lowest in the SoHo (south of Houston Street) and TriBeCa (triangle below Canal Street) neighborhoods, according to the CitiHabitats report.

A three-bedroom apartment rents for more than $7,000 in Soho and TriBeCa, triple the price in Harlem and more than double the price in the Morningside Heights area in northern Manhattan.

 BLOOMBERG

Manhattan Apartment Rents Drop 9.4% as City Job Losses Mount

By John Gittelsohn

Jan. 14 (Bloomberg) — Manhattan apartment rents dropped 9.4 percent in the fourth quarter of 2009 from a year earlier as Wall Street jobs vanished in the recession.

The median rent fell for all apartment sizes except two- bedrooms, which were little changed, according to a report today by broker Prudential Douglas Elliman Real Estate and appraiser Miller Samuel Inc. A separate tally by broker Citi-Habitats Inc. showed the average apartment price declined 7.3 percent for the year. The company didn’t report medians.

New York City lost 25,200 finance jobs in the 12 months ended Nov. 30 and the unemployment rate climbed to 10 percent, curbing tenants’ appetite for bigger and more expensive apartments. Joblessness also forced landlords across the U.S. to cut prices as the nationwide vacancy rate reached a record 8 percent in the fourth quarter, New York-based research firm Reis Inc. said Jan. 7.

“I don’t think you’re going to see a significant improvement, if any, in 2010, with unemployment in the 10 percent area,” Miller Samuel President and Chief Executive Officer Jonathan Miller said in a telephone interview.

The effective decline in Manhattan apartment costs was likely greater than either broker reported because the figures don’t reflect concessions such as a free month’s rent, Miller said.

About half of 2009 rentals came with such enticements, said Citi-Habitats President Gary Malin.

“These days, the landlord’s goal is to get tenants,” Malin said.

Prices by Size

The median rent for a Manhattan studio fell 8.5 percent in the fourth quarter from a year earlier to $2,100, Miller reported. One-bedrooms declined 11 percent to $2,850; two- bedrooms cost $4,700 a month; and three bedrooms were down 18 percent to $6,588.

Luxury prices were little changed at $8,663, Miller reported. Many people in that price bracket sold co-ops or condominiums and were waiting to buy again, said Shelley Saxton, a broker for Brown Harris Stevens.

“They want to be in a position they can pull the trigger and buy,” Saxton said. “For now, they’re sitting on the sidelines.”

The time apartments spent on the market declined 22 percent to an average of 76 days, Miller said.

Manhattan’s fourth-quarter vacancy rate fell to 1.76 percent from 1.96 percent, Citi-Habitats said.

The company used its own data and counted more than 2,600 deals during the quarter. Prudential Douglas Elliman and Miller Samuel culled their information from 2,456 transactions recorded by the Real Estate Board of New York, a trade organization.

Transactions Rebound

Transactions recorded by Rebny jumped almost 48 percent in the fourth quarter from a year earlier, just after Lehman Brothers Holdings Inc. filed for bankruptcy.

“We’re seeing consumers come back because they’re taking advantage of lower prices,” Miller said. “We’re not arguing that Manhattan is an inexpensive place to live, but relative to what it was, rents are less.”

Citi-Habitats reported a 30 percent increase in rental transactions.

The company handled almost 13,000 rentals in 2009, including almost 2,000 newly built apartments, said Clifford Finn, managing director of new development for the brokerage.

The company’s largest project was Silver Towers, a 1,254- unit complex at 620 W. 42nd St. developed by Silverstein Properties Inc.

Silver Towers features a 24-hour concierge, valet dry cleaning, a fitness center and 75-foot indoor pool. Rents for one-bedroom apartments in the 60-story tower start at $2,965, with the first two-months free on a 14-month lease, Finn said.

SoHo Rents Highest

The SoHo/TriBeCa neighborhood had the highest rates in Manhattan, with one-bedroom apartments averaging $3,145 a month, Citi-Habitats said. SoHo/TriBeCa also had the lowest vacancy rate at 1.05 percent.

Miller, who divided Manhattan into four quadrants, reported the West Side had the highest median rent at $3,495, up 5.9 percent from the fourth quarter of 2008.

Rents fell 19 percent to a median of $2,600 on the East Side between 42nd and 96th streets. Downtown rents dropped 7.7 percent to $3,000, Miller said.