Lenders, Landlords Prepare for Market Correction in Manhattan

A series of stories reveals that landlords and investors in New York are starting to see signs that the real estate market in Manhattan is slowing its race to the top of housing prices.

"Equity Residential said rents on newly signed apartment leases on Manhattan’s west side may be flat this year as competition mounts from a surge of new supply coming to the area," reports Oshrat Carmiel earlier in February. That's just one company's experience, but Carmiel also notes the trends for the entire borough:

The options for well-to-do tenants across Manhattan are set to jump this year as more than 6,700 newly built apartments will be listed for rent, the most since 2005, brokerage Citi Habitats said in December. Most of the units will be priced in the top 10 percent, or luxury tier, of the market, where rents were little changed in December from a year earlier, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said in a report.

Carmiel also reported in December 2015 that apartment vacancies in Manhattan had reached the highest level in the last nine years, which is usually a sign that rent growth will slow.

In a separate article, Konrad Putzier reports that lenders are responding to the glut of supply at the top end of the Manhattan market. "Wary of a slowdown in high-end apartment sales and a potential supply glut, lenders are beginning to retreat from Manhattan’s luxury condominium market," writes Putzier. "The reluctance to lend reflects broader worries over New York City’s luxury condo market. After a three-year period in which developers fell over themselves trying to raise the bar in terms of price and opulence and records were set on a regular basis, the market is showing signs of a correction."