When the coronavirus outbreak first hit, New York City was quick to emerge as its epicenter. That alone was a good reason to send residents fleeing to smaller cities or suburbs.
But that’s not the only reason so many Manhattan apartments have sat vacant for months. The remote-work trend also prompted a lot of people to pack up their shoebox-sized homes and seek out more space. Abandoning New York City also wasn’t a hard thing to do given that since the start of the pandemic, nightlife has been shuttered, Broadway has been dark, and there was even a point when city dwellers couldn’t so much as enjoy a meal inside a restaurant.
It’s not shocking, then, that in December of 2020, New York City’s residential vacancy rate reached 5.1%. By contrast, in December of 2019, it was only 1.81% across Manhattan, Brooklyn, and Queens. The problem got so bad that landlords have had to resort to drastic measures, like offering up free rent, in order to entice tenants to sign leases.
But now, there’s reason for real estate investors in New York City to be hopeful that a major corner will be turned this month.
Moving in the right direction
For the first time since January of 2019, the number of people moving into New York City is projected to surpass the number of people who are moving out, according to Nancy Packes Data Services.
While residents were leaving the city prior to the pandemic, the coronavirus outbreak accelerated that trend. In March of 2020, over 89,000 people left New York City due to health-related fears, which was more than double the number of people who moved out of the city during the prior month and resulted in a net loss of 42,000 residents.
Thankfully, the bleeding has slowed down in recent months. In January of 2021, for example, the net loss of residents leaving New York City was 18,000 households — a far cry from 42,000. But still, April is poised to be the first month in a long time when more people look to move into the city than leave it behind. And that’s good news for landlords with vacancies on their hands.
Of course, landlords may still need to take steps to lure in tenants, such as offering competitive rent or other concessions. But if this trend continues, the city’s vacancy rate could start to move in the right direction — and landlords could be in line for a nice stream of revenue.
And to be clear, there is a good chance we’ll see an increase in people moving into New York City as things improve with regard to the pandemic. Not only might more people take up residence in the city to enjoy its newly reopened nightlife, but as more and more employers call workers back to the office, some of the people who moved out of the city during the outbreak may have to return or otherwise face a daunting daily commute.
All told, there’s reason for New York City’s real estate investors to think residential leasing activity will pick up in the near term — and that the city on a whole is on a path toward recovery.