Recent New York City Rent

[BG2008]

Guys, 

 

I have been hearing that NYC apartment rent has really firmed up lately with concession gone.  Any NYC residents here that can share their recent lease renewal or apartment hunting experience?  My former intern just got a pretty awesome duplex in Brooklyn by Barclays for $4,500 for 4 people.  He got a really good deal.   

 

 

[DeepSouth]

Moved to west village last month. Close to zero listed inventory and 40-50 people touring per listing, so prices feel above 2019 levels. My sense is rent is still attractive in outer boroughs and commercial districts with high rise resi (midtown/fidi)

[BG2008]

45 minutes ago, DeepSouth said:

Moved to west village last month. Close to zero listed inventory and 40-50 people touring per listing, so prices feel above 2019 levels. My sense is rent is still attractive in outer boroughs and commercial districts with high rise resi (midtown/fidi)

Thank you for the valuable data point.  Seems like the better neighborhoods are already back to 2019 levels.  

[Gregmal]

I keep hearing this, and then I look at my CLPR shares and Im like "WHERES MY FUCKING MONEY?"! 

[BG2008]

2 hours ago, Gregmal said:

I keep hearing this, and then I look at my CLPR shares and Im like "WHERES MY FUCKING MONEY?"! 

What did you do? Up 8% on a day when everything is down and about 2.5x average daily volume by noon?  

 

[BG2008]

So you complain about not making money and Boom, it's up 8% 2 hours later.  I'll tell you what I own and you can bitch about it and we'll split the gain at 4%! 

[thepupil]

And so on this day in in the year of our Lord Two Thousand and Twenty One, @Gregmal asks of Mr. Market where his money lay, and as manna from heaven, Mr. Market showered tendies upon him. Ask and ye shall receive. 

[Gregmal]

LOL funny how that works. Sometimes you gotta go Tony Soprano on Mr. Market. 

[CorpRaider]

I assumed that Clipper was ripping due to a passing mention on my blog.   Now that you mention it, however, I think I read some article about firming rents and exploding demand for NYC apartments today, maybe in WSJ.

Edited July 8, 2021 by CorpRaider

[BG2008]

I think you're referring to the Bloomberg article referencing the Miller report 

[CorpRaider]

Yeah that's it, my bad if I missed reference above. 

[fareastwarriors]

Another bloomberg article:

 

 

Manhattan’s Apartment Rebound Means Sweet Deals Are Fading Fast

 

As tenants pour in, landlords are trimming pandemic-era perks

New arrivals are competing with New Yorkers plotting a return

 

https://www.bloomberg.com/news/articles/2021-07-14/manhattan-s-apartment-rebound-means-sweet-deals-are-fading-fast?srnd=premium

[thepupil]

so are all these peeps gonna work from their apartments? 

 

office leasing is about 50% of pre-covid, which at 7% expiry / year should see occupancy decline (marketwide) by 3-4%/year with the higher quality buildings taking share (this is consistent w/ my observation at least, $SLG is signing great leases, $VNO signed the 2 largest leases of last Q after signing the largest leases last year). 

 

My question (to which i don't have an answer) is if NYC fills up with young vibrant ambitious well paid people again (which appears to be happening), will we see office leasing achieve pre-pandemic levels. 

 

we'll see. office s/d can still suck with lots of people in NYC. 

 

 

[Castanza]

39 minutes ago, thepupil said:

so are all these peeps gonna work from their apartments? 

 

office leasing is about 50% of pre-covid, which at 7% expiry / year should see occupancy decline (marketwide) by 3-4%/year with the higher quality buildings taking share (this is consistent w/ my observation at least, $SLG is signing great leases, $VNO signed the 2 largest leases of last Q after signing the largest leases last year). 

 

My question (to which i don't have an answer) is if NYC fills up with young vibrant ambitious well paid people again (which appears to be happening), will we see office leasing achieve pre-pandemic levels. 

 

we'll see. office s/d can still suck with lots of people in NYC. 

 

 

Offices will be rented and flexible working hour policies will be established. All covid did was help bring fresh ideas to the forefront. As I said in the beginning…for every person looking to get out of the city grind and work from home, there is another five chomping at the bit to live the big city lifestyle. It’s still playing out, but I think over the next year or two life won’t be much different than pre covid. 

[BG2008]

One area of incremental demand that I have not heard of people talk about is wealth empty nesters selling their large homes in the burbs and moving into the city and wanting Class A apartments.  This is increasingly a trend among folks who are 60+ as they do not want to maintain a 3-4k sqft house and want the convenience of living in a big city in a doorman building with high walkability scores and access to arts and culture.   Cities are generally still safer than 30 years ago.   First order thinking is all the millenials decamp to the burbs.  But there is likely a swap between a family of 3 with an empty nester who is wealthier.  

 

Maybe this is just wishful thinking on my end. 

[Peregrine]

I don't really get this talk about NYC fading. Urbanization has been a global trend ever since human civilization began and has outlasted basically everything. Now, some may decamp for cheaper and smaller cities or suburbs but there will be others who make up the gap. There's a reason why people (especially the young) have always gravitated towards the largest cities.

[cubsfan]

^ Yeah - the only problem is this thing called violence that is exploding in many of America's larger cities. Not at all an insignificant problem.

[rkbabang]

12 minutes ago, Peregrine said:

I don't really get this talk about NYC fading. Urbanization has been a global trend ever since human civilization began and has outlasted basically everything. Now, some may decamp for cheaper and smaller cities or suburbs but there will be others who make up the gap. There's a reason why people (especially the young) have always gravitated towards the largest cities.

 

 

Long term, yes, but there have been decades long stretches where people have fled cities like NYC.  If you get caught buying at the beginning of one of those declines you will would not do well.  EDIT: I'm not saying we are in one of those long-ish declines.

 

Edited July 14, 2021 by rkbabang

[Gregmal]

Eh I think people are looking at it wrong. Of course the city will come back. I think Eric Adams is potentially a very positive step. However here's the relevant thing as an investor. The pandemic really highlighted how unnecessary it is/was to be paying $3000 for a one bed room in NYC when you can get a one bed room in Miami or Dallas for $1000. My man BG has the "Tinder index" which I think is valid. I grew up around NYC(NJ suburbs)....spent a good amount of time in the city, worked there for a bit. In terms of pussy, there was no comp. My buddies used to marvel at how an early something 20s chick in the burbs was considered a ho if she'd been with more than a half dozen dudes. But in the city, the average chick you ran into had a number of like 30-50! Totally different breed and mentality and I think it highlights how people go to the cities to get down and have a good time. But its about spreads. Covid highlighted this. Technology enables it. WFH helps. But the tinder premium for NYC fades because of thing like Tinder. If you dont think Miami, Tampa, Dallas, Phoenix, etc dont have the same sort on poon as NYC....I'd welcome you to take a due diligence trip. NYC IMO used to have a huge advantage pre social media insanity....but now that you dont have to rely on just bumping into people on crowded streets, theres just as much opportunity in other markets. Now this probably doesnt work for Louisville, KY...but other top tier markets in low tax and business friendly states? Absolutely. So thats where the investment opportunity is. No way NYC of SF should be at 3 caps with South FL or whatever at 5s. Which is what is was pre covid, but thats already compressed a ton and should continue to compress further. RE and especially income streams are about safety and growth. Doesnt take a rocket scientist to tell you where thats occurring naturally and where its occurring simply because of a big reset. 

[BG2008]

Gregmal, 

 

1) Don't under estimate how handsome you are.  You devilish good looking man with wicked sense of humor.  The rest of us don't have your game.  

2) I think today, Sunbelt is at 3 handle cap rate and NYC is a 5 cap.  It has inverted.  

3) Higher taxes affects 20 year old less than old stodgy dudes like you and me with kids 

4) Most 20 year old willingly spend all salary and just contribute to 401K with matching.  I did that and I have no regrets even if that $1,000 will become $1mm of 2060 money or whatever. 

5) Big law, entry tech, IB, etc don't migrate well outside of NYC.  Once you have built a reputation as smart with 10 years of experience, Miami, Tampa, Dallas, and Phoenix look a lot more attractive. 

 

Differences in opinions make markets.  I would've made more money if I bought more NXRT and PCYO.  But not complaining about my current picks.  Although, I have sold out of VNO and PGRE and kept some ALX. 

[Gregmal]

haha its funny cuz this morning I was looking over VNO+AIV again....I've been starting to get the feeling the Ny/coastal stuff may have a catch up rally ahead of it. Or that the sentiment may be starting to turn a little bit. 

 

Then I was like

 

 

Edited July 14, 2021 by Gregmal

[TwoCitiesCapital]

The big things going forward for NYC will be infrastructure, climate, and demographic trends. 

 

Infrastructure:

I left in 2017 and the subways were basically beginning to fall apart with no option of fixing. Many of the components literally just aren't made anymore since these are running on pre-war technology.  There were plans to shut entire lines down for a year, or more, to replace with more modern technology.

 

I don't know if they went through with that, but the options looking forward are awful and there are no great alternatives. Car ownership is incredibly expensive, fraught with headaches, and you sit in traffic all of the time. Buses? Often times its faster to walk. Taxi/Uber? Sure...but way more expensive and way slower than a subway at peak hours. Also, consider what traffic will look like if even just 10% of regular subway riders opt for vehicles....Disaster!

 

Climate:

NYC just isn't built for flooding. I was there for Sandy and it was a disaster compared to my experiences on the Gulf Coast with REAL hurricanes. Being an island surrounded on all sides by water, and not having invested in infrastructure to prevent flooding, and having your transportation underground is a recipe for disaster. Particularly in a future where we anticipate more violent storms and rising ocean levels. We're also entering the 19-year period of elevated tides due to the moon's orbit which will only make all of this worse for the next 2-decades. Climate change has the potential to impact NYC just as dramatically, if not more so, as any coastal city like Miami and New Orleans because there's not much flexibility for an alternative transportation infrastructure if/when subways flood. 

 

Demographic Trends;

The 2010 census showed a net migration out of the Northeast towards the South East for first time in decades - mostly due to aging population and tax arbitrage I'd guess. The 2020 census confirmed the trend, though could have been skewed by temporary Covid-related factors. Do we expect either the tax, or the aging population, to change in the next 10-years? My guess is the 2030 census shows more of the same. 

 

I'm not predicting an imminent decline for NYC - more so just a secular stagnating of total population or a slow decline. It's still a great city, but I think it's best years are behind it.. at least for the next 1-2 decades. 

 

Edited July 14, 2021 by TwoCitiesCapital

[Gregmal]

I think theres merit to that. If you've visited a lot of those places you'll have noticed that South Beach or Phoenix are very different markets than Houston/Dallas. For varying reasons. But I also think a lot of those gaps are closing. Miami and Tampa for instance have gotten way more diverse as tech migration has occurred to those areas. Salt lake City I always thought had many similarities to something like Pittsburgh. DC IMO is ultra unique and kind of irreplaceable because of all the government jobs and government catering business. But NYC/Chicago/LA....I think while they are special....the lifestyle costs are out of line with alternatives. Do folks really need Chicago when Nashville is there? We've seen a lot of the LA to TX exodus, same as NY to FL. I think BG is right that the cap rates have flopped, but I think going forward rent growth will be the driver. At least as far as investing in those places goes. Can very easily see 5%+ for a good while in the hotter MSAs. The NYC/CHI/LA Can probably get back to "around normal" but those places also IMO had a lot of structural issues before covid. For instance NYC had a glut of new office coming online before WeWork blew up. 

Edited July 14, 2021 by Gregmal

[fareastwarriors]

 

The Rapid Increase in Rents

What is happening? Why? And what will happen.

 

https://calculatedrisk.substack.com/p/the-rapid-increase-in-rents

[fareastwarriors]

New York Renters Face 70% Increases as Pandemic Discounts Expire

 

The era of Covid concessions for apartment hunters is over.

 

https://www.bloomberg.com/news/articles/2021-09-15/new-york-city-rents-landlords-jack-up-prices-70-in-lease-renewals-post-covid?srnd=premium