By Ilana Siyance
Some landlords are choosing to leave apartments empty for the time being, rather than rent them out at lower prices, amid the rental slump brought on by the pandemic.
The pandemic led many offices to allow employees to work remotely. This led many renters to flee Manhattan, for greener pastures and cheaper rent. This increased Manhattan apartment vacancies, and thereby lowered rental prices. As reported by the WSJ, Manhattan landlords have begun taking unrented apartments off the market, creating a lack of inventory, amid the dropping rental prices. In February alone, building owners pulled 1,814 Manhattan apartments off the market, as per real-estate data analytics company UrbanDigs. That is over three times the number of apartments taken off the market in the same month last year.
This act of “warehousing,” or pulling units off the market, creates a synthetic shortage in the market. Housing advocates and lawmakers have long criticized this practice, saying it unfairly reduces the number of affording housing units available. Landlords maintain they have the right to decide to warehouse, and it is sometimes a necessary way to protect themselves, from both regulatory and economic changes- including the pandemic eviction protections put into place which ban landlords from evicting non-paying tenants. In August, Warehousing reached a peak with 5,563 listings being yanked off the market by landlords.
Landlords are holding onto vacant apartments, in hopes that the market turns around and they can rent out the homes at better prices. The pandemic has decreased demand for Manhattan apartments, which has led median rental prices to tumble over 17 percent for the year ending in December, as per a report from Miller Samuel and real-estate brokerage Douglas Elliman. Besides for the decline in rental prices, landlords have also been offering 25 percent more rent concessions, compared to the previous year.
Tenants currently have more negotiating power in new leases than ever before. So, rather than get tied down into deeply discounted long-term leases, tenants are holding on in anticipation that the COVID-19 vaccines will bring the market relief by the spring or summer. One landlord, speaking anonymously, told the WSJ that he removed listings for 15 percent of his apartments in two buildings on the Lower East Side, to shield himself from the lower rental rates, and the eviction moratorium.
Last year, State Assembly member Linda Rosenthal, a Democrat from Manhattan, presented a new law to fine landlords who ‘warehouse’ apartments for over three months. Rosenthal said she looks forward to presenting a new version of the bill later in 2021.