Manhattan Market Showing Signs of Weakness as Rental Prices Dip

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The Manhattan residential market looks to be showing signs of weakness as average rental prices are on the decline and vacancy rates are moving higher, which is atypical during the summer season. In an effort to counteract this trend landlords are once again offering OP's or "owner pays" concessions to sweeten the deal for potential tenants.

Landlords have increased prices to such a height that people are having trouble affording their rent. Therefore, landlords have more vacancies on the horizon than they expected

The Manhattan rental market slowed down earlier than expected after peaking this summer. For the first time this year, mean rents declined in almost all units citywide, according to the August 2007 Manhattan Rental Market Report released by The Real Estate Group.

Citywide one bedroom units had the greatest decrease yet this year. Two bedroom rents in SoHo continue to plummet, and are the lowest they have been all year. Also declining are rental prices in Greenwich, which fell across the board.

The number of vacant inventory this month is much greater than expected at this time of season, another sign of a cooling rental market.

Landlords are now scrambling to reduce vacancies by offering more OP's, which stands for "Owner Pays" the tenant's partial broker fee. In the last two weeks, the Listings Department of The Real Estate Group has seen a 200% increase in OP's.

"Landlords have increased prices to such a height that people are having trouble affording their rent. Therefore, landlords have more vacancies on the horizon than they expected," says The Real Estate Group's C.O.O. Daniel Baum.

The August 2007 edition of the monthly Manhattan Rental Market Report is based on over 10,000 currently available listings located below 100th Street and under $10,000. Data from The Real Estate Group's proprietary database combines statistics from the REBNY Real Estate Listings Source (RLS), On Line Residential (OLR.com) and R.O.L.E.X. (Real Plus). All reports can be found in the Market Reports section http://www.tregny.com/manhattan_rental_market_report of the Real Estate Group's website.

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Ryan McCann

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