A Tough Week for New York’s Rental, Construction Market
- Jun 04, 2008
Two news stories this week showcased the New York apartment market’s current troubles–both with building, and with renting.
Last week, we covered the sad news of yet another fatal crane collapse at a residential building site in New York–the city’s second in recent weeks.
Not surprisingly, the city has reacted strongly: They’ve stopped use of the Kodiak cranes, and developers at five sites are losing thousands per day as a result, according to Crain’s New York Business.
Temporary buildings commissioner Robert LiMandri issued stop-work orders for all seven of the Kodiak cranes operating in New York so that the city could inspect them.
The cranes were being used at five sites–most of them with a multifamily component: the accident site, First Avenue at East 91st Street; a mixed-use development at 808 Columbus Ave.; a new W Hotel in the financial district; a luxury residential building located at 245 10th Ave.; The Laurel Condominiums at 400 E. 67th St.
Obviously, safety is a priority–but since city officials haven’t given the developers a timeline for the inspections, they’re forced to wait, and that’s an expensive pause.
The delays could take weeks, Crain’s said; although the crews have been mostly reconfigured to do work that doesn’t involve the crane, that could make it very difficult for those projects to stay on budget.
And it’s becoming a growing problem in the city: The amount of construction projects that the New York City Department of Buildings has stopped due to safety violations has increased 79 percent since January.
The most recent crane accident may also result in a new training requirement for entire crane crews–a 30-hour initial training and additional eight-hour course every three years, according to Crain’s.
Construction delays can be costly for developers and cause big problems for the renters waiting to move into the new or rehabbed buildings–although, according to one recent news story, New York may have less renters to worry about.
Fox quoted the New York Post as saying rents are starting to decline in the Big Apple. A studio in York Avenue and the East 70s is running about $1,500 a month; a two bedroom in the West 170s is renting for the same amount, according to Manhattan Apartments, Inc.
The Financial District and Upper East Side are also offering deals, the Post said.
Move further away from the subway, and things get even cheaper.
The decline is an interesting turn of events for New York, which has largely avoided the giant real estate price declines that the national housing slump has caused in other cities.
However, last month, numbers indicated that the slump may finally have reached New York–as we recently reported, residential building permits have sunk 50 percent in the past year in New York City, which clearly indicates there’s less of a demand for housing.
And now, according to Fox, desperate landlords are willing to pay a month’s rent for new renters or foot the broker’s fee.
You could argue that less demand for rental properties means more New Yorkers are buying apartments–but those lower building permit numbers indicate that may not be the case for long.
Could New York–which long withstood the housing slump–finally be feeling the effects? And is this an indication the national housing decline is nowhere near over–and in fact, spreading to claim new victims? What do you think?