Average free market rents in Northern Manhattan declined approximately 15 percent in the first six months of 2009 compared to the same period last year, according to the Northern Manhattan Residential Rental Report produced by real estate broker Shimon Shkury and his team.
“According to our study, free market rents throughout Northern Manhattan averaged approximately $28 per square foot, which represents a 15 percent decline from last year’s average of $32 per square foot,” said Mr. Shkury, a partner at Massey Knakal Realty Services.
The report noted, however, that the majority of the units throughout Northern Manhattan continue to be rent regulated. Rent regulated units averaged about $18.28 per square foot during the first two quarters of this year, which presented a 55 percent potential increase, or upside, on the existing rents for those units.
“This implied ‘upside’ explains the current trend for building investors to accept lower returns compared to free market buildings,” Mr. Shkury continued. “Investors believe that such regulated multifamily buildings offer protected downside and higher future returns that come with regulated unit turnover.”
Although free market rents have declined, Shkury said he expects buyers to continue to purchase rent regulated buildings that have an upside at relatively low capitalization rates.
The report breaks down the average rent per square foot for free market units compared to rent regulated units in 12 separate Northern Manhattan zip codes, and shows a sample of average free market rents for studios and one- to four-bedroom units currently available in those neighborhoods. Sixteen notable residential rental projects in Harlem and their amenities also are profiled in the report.
For a copy of the research report, please contact Ivan Petrovic at 212-660-7757.
About the Northern Manhattan Team:
Shimon Shkury’s Northern Manhattan Team is made up of Michael A. Tortorici, sales team manager; Victor Sozio, director of sales; Christopher L. Lefferts, senior sales associate; Ivan Petrovic, director of research; and Brent Rance, research associate. Mr. Shkury’s Northern Manhattan Team produces a number of reports analyzing the real estate market including the Northern Manhattan Sales Report; Residential Rental Reports; and Harlem Condominium Report. For copies of the team’s research reports, please contact Mr. Petrovic at 212-660-7757.
Since joining Massey Knakal in 2002, Mr. Shkury’s individual broker transactions have included: 195 transactions (257 in investment sales), consisting of 2 million in total square feet, and totaling about $650 million in investment property sales. The largest single asset transaction, a 250,000 square foot residential property on the Upper East Site, was sold for $80 million. The largest portfolio of three buildings–residential properties at 15 and 19 West 55th Street and 779 Riverside Drive, and an office building at 330 West 38th Street–totaled $120 million.