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We published our Manhattan Rental Market Overview this morning, so I thought I'd present a little more info to provide additional context. I paired up two metrics which don't necessarily correlate, but individually they capture a snapshot of the rental market and recent trends. I presented median rent adjusted for inflation and listing discount, both trended over the past decade.
After adjusting for inflation, the median monthly rent fell 30% in 2Q 2001 from $4,272, just as the market was slipping into a recession, and fell 21% from $3,800 in 4Q 2006, just as the credit environment was about to unravel. Median rent in the quarter that just wrapped up was $3,000 per month. Of course this doesn't consider landlord concessions such as free rent and broker commissions, so if we had the data for net effective rent, the declines over both periods would be more pronounced. However, the net effective rent would likely have shown a relative increase in 2Q 2010 as landlords recently began to reduce their reliance on concessions to keep vacancies low.
Listing discount—the percent difference between the average listing rental price at the time of lease signing and the face rent (rent paid without adjusting for concessions) agreed to at signing—has shown a lot more volatility over the decade but nearly fell through the floor in the last quarter as landlords became more firm in negotiations. For perspective on the 1.8% figure, the listing discount averaged 3.1% each quarter for the decade prior to the Lehman "tipping point," and 7.4% since Lehman, but excluding the second quarter.
· Inflation-Adjusted Median Rent v. Listing Discount [Miller Samuel]
· Manhattan Rental Market Rebound Continues [Curbed]