Why Are These N.Y. Renters Smiling?

Rents are down throughout New York. According to the February Manhattan Rental Market Report produced by the Real Estate Group, a New York brokerage firm, rents in the borough have fallen “across the board.”

The biggest drop was in studio apartments in doorman buildings, which have fallen 8.33 percent from the same time last year.

In February, the average rent for a one-bedroom apartment in a nondoorman building was $2,632, according to the Real Estate Group. It was $3,395 for a one-bedroom in a doorman building.

Another bonus for New Yorkers concerns the broker fee, which has usually been paid by the renter and can add 15 percent of a year’s rent to the initial cost of leasing an apartment. These days, as attracting good tenants has become more difficult, owners have started paying the broker fees themselves.

According to Halstead Properties, out of 4,230 open and exclusive listings for apartments between Feb. 15 and March 15, 30 percent offered owner payment of the broker fee. Over the same period in 2008, only 8 percent of Halstead’s apartments offered that incentive.

Housing downturn hits L.A.-area rents

After rising for several years, rents in the Los Angeles area are declining because of the economic recession and depressed home prices, researchers, real estate agents and property managers say.

The lower local rents match a national trend, according to a report released Wednesday showing apartment rents fell in 54 out of 79 U.S. metropolitan areas in the fourth quarter of 2008. Softening rents add another obstacle to a housing market recovery, economists say, because tenants with low rent payments feel less urgency to buy a home.

Nationwide, apartment rents eased 0.1% in the fourth quarter, the first drop since 2002, according to the analysis by research firm Reis Inc.

Los Angeles apartment rents fell 0.7% in the fourth quarter, the first decline since 2001, although overall rents for the year were up slightly over 2007.

Property owners and real estate agents say the supply of rental units has climbed in the last year. Overbuilding during the real estate boom added vacant units to the rental pool, and some home sellers discouraged by the moribund real estate market are renting their houses or condominium units rather than trying to sell. Foreclosures add both supply and demand to the rental market, as foreclosed homes become rentals and former owners seek places to rent.

Declining incomes and rising unemployment also mean people have less to spend on rent.

Mark Verge, owner of the property listings service Westside Rentals, said he'd seen rents fall faster in the last three months than at any time since he founded the company 13 years ago.

"I used to have to beg owners to lower rents. Now they ask me, 'What do you think I should lower it to?' " Verge said.

Verge said his service had 24,000 units listed for rent -- a 33% increase from the 18,000 he had at this time last year.

Finally, Renters Have Some Pull (WSJ 1/20/09)

Now it's a renter's market, too.

As the housing downturn deepens, rental rates are falling in many major U.S. cities, including New York and Los Angeles, and tenants are finding they have greater leeway to renegotiate their leases.

Apartment rents nationwide fell 0.4% in the fourth quarter from the third quarter -- the first drop since 2003, according to Reis Inc., a New York City-based real-estate research company. Apartment vacancies rose to 6.6% in the quarter from 5.7% a year earlier.

According to a report released Tuesday by the Real Estate Group of New York, a Manhattan-based brokerage firm 45% of rents in Los Angeles declined.

In some California cities, vacancy rates are being boosted by the conversion of new condo projects into rentals, says Patrick S. Duffy, principal of MetroIntelligence Real Estate Advisors, a real-estate consulting firm based in Los Angeles. In downtown L.A., where there are a lot of new condos, the vacancy rate was almost 10% in the fourth quarter, compared with an L.A.-wide vacancy rate of 4.5%.

Building owners fear that this summer's crop of college grads will move back home with their parents rather than renting apartments, says Jessica Scully, vice president of Scully Company, a property-management company with units in Pennsylvania, Florida, New Jersey and Connecticut.

The company is offering up to two months of free rent to new tenants at some locations,