A report from the Pittsburgh Business Journal in Pennsylvania. “New York-based King Penguin Opportunity Fund has defaulted on its $16.4 million mortgage for City Centre Tower, the biggest of three buys the firm made in downtown Pittsburgh. Martin Perry, a managing director in the Pittsburgh office of Newmark Knight Frank, said he continues to market the Pittsburgher after it failed to generate a buyer in a recent auction. ‘It was probably inevitable that the building was heading in this direction,’ he said.”
The Wall Street Journal on New York. “Lower Manhattan’s most famous rental apartment building has it all. What it doesn’t have: enough tenants. Nearly one-quarter of the units at the roughly 900-unit apartment building became vacant during the Covid pandemic, according to data company Trepp LLC. Apartments are now advertised with three months of free rent on 12-month leases.”
“The building’s vacancy rate surged to 26.25% in the third quarter, according to data firm Trepp. The tower’s struggles reflect a deepening crisis in the Manhattan real-estate market. The pandemic has led to an exodus of well-heeled young professionals to the suburbs and warmer, cheaper cities, leaving apartment landlords with rising vacancies.”
From The Real Deal. “In New York City, the residential market has taken a beating from the pandemic. New York City’s unemployment rate in November was 12 percent. That translates to 771,200 New Yorkers out of work, predominantly from the leisure and hospitality sectors. ‘Many of the city’s small businesses have closed permanently, and it will take time for new business and jobs to be created in their place,’ said StreetEasy economist Nancy Wu.”
“While contract activity is finally approaching 2019 levels after a largely dismal year, Greg Heym, chief economist at Brown Harris Stevens, notes that the city’s pre-pandemic market wasn’t in such great shape, either. Much of the city’s excess inventory is high-priced, new development condominium units, most of which were sitting unsold long before the pandemic. ‘We had an inventory problem back then, and we have a worse one now,’ Heym said.”
“‘In a sense, New York is on sale right now,’ said Dylan Pichulik of XL Real Property Management. ‘We know the developers need money … and we’re starting to see headlines about banks trying to foreclose.’”
The Denverite in Colorado. “The latest rent report from Apartment List put the median for a Denver two-bedroom at $1,536 in December, down slightly from November and down 6.6 percent since the pandemic arrived in March. Apartment List has been tracking a steady decline in rents in Denver since March. As of December, 2020’s median was down 5.3 percent from December 2019.”
The Tampa Bay Times in Florida. “The first apartments at Heron, the multi-billion-dollar downtown development’s first residential tower, hit the market in late December, with listings, as of Tuesday, starting at $1,918 per month for a 545-square-foot one-bedroom. That’s significantly higher than current rents elsewhere in the city. Heron’s smallest unit lists for $3.52 per square foot — a price ‘substantially higher’ than anywhere else in the city, said Cindi Reed, ApartmentData’s regional vice president.”
“‘That sounds like condo-quality living, so there’s going to be a very distinct, upper-end profile that’s going to cater to this property,’ Reed said. ‘By the time they start leasing to see who’s going to buy at those prices, they may be coming down from that. But I don’t see anything in Tampa that’s going for those kinds of prices.’”
“Another crop of much more expensive residences hit the market last month. The Residences at the Tampa Edition are 37 luxury condos. Those homes have been quietly available for more than a year, but officially went on sale in December. They’re not expected to be ready until late 2021. Two other residential projects are in the works. When these and other nearby developments come online, it could drive Heron’s prices down.”
From Livable in California. “In December, the median rent for a one-bedroom apartment in Los Angeles dipped below $2,000 for the first time since at least 2016, according to Zumper. Surging COVID-19 cases, a citywide safer-at-home order, and the onset of the holiday season contributed to the decline in rental prices, which sank to a one-bedroom median of $1,960 last month. The last time LA rents dipped below the $2,000 mark was December 2016, when the typical one-bedroom apartment went for $1,990 per month. Compared to the same period last year, one-bedroom rents have fallen 13.3 percent.”
“‘If the hyper-expensive markets that renters abandoned in 2020 drop so low that they cease to be hyper-expensive, then it’s reasonable that renters would return to these markets and prices would stabilize,’ wrote Zumper data analyst Neil Gerstein.”
The San Francisco Chronicle in California. “San Francisco’s rental housing market is starting the new year much as it ended the old one: Rents are dropping, vacancies are climbing, and landlords and tenants alike are muddling through the pandemic’s ninth month without knowing when — or if — life and work will return to normal. Apartment List shows that rents in San Francisco, dipped 2.7% in December and have dropped 26.7% since March, pushing the median two-bedroom monthly rent from over $3,000 to to $2,305. A report from another group, Zumper, had rents down 24% year over year.”
“A December survey of 172 landlords — the respondents collectively own 4,741 units — found that 24.7% of tenants have vacated their units, or gave a notice to vacate, since the start of the pandemic in March. The vacancy rate for those property owners stands at 16.3%, although some landlords have more than 25% of their portfolio vacant.”
“Meanwhile, with much of the workforce in limbo waiting to see how quickly the new vaccines can slow the coronavirus’ spread, landlords are stuck with empty apartments that just a year ago would have been flooded with applicants, said Charley Goss of the San Francisco Apartment Association. ‘Tenants are kicking the tires right now but not actively applying for apartments,’ Goss said. ‘And if they are, they have a lot to choose from. There are a ton of vacancies and a lot of competition.’”
“Some landlords are going to unusual lengths to attract or hold on to tenants — offering eight or 10 weeks of free rent, free parking or flexible month-to-month leases. Of the association members who responded to the survey, 56% have received requests to lower rents pandemic started and 54% have granted those requests. Median rents in San Francisco stand at $1,992 for a one-bedroom apartment and $2,305 for a two-bedroom, according to Apartment List.”
“But the number of tenants unable to pay their rent is on the rise — in December 5.1% paid no rent and 6.6% paid partial rent. That is double the number of tenants who didn’t pay in the spring and summer. In December total unpaid rent for the 4,741 units was about $3.6 million. Tenants who have lost income because of the pandemic are barely holding on — borrowing money, depleting savings, dipping into retirement accounts, using credit cards to pay rent, said Brad Hirn, an organizer with the San Francisco Housing Rights Committee.”
“Many of those tenants now owe more than $10,000 in back rent and don’t know when that money will be due or how they will come up with it.”
From KQED in California. “The eviction moratorium California enacted in August is set to expire at the end of this month. But for many unemployed residents, their job won’t magically reappear on February 1. KQED reporter Joe Fitzgerald Rodriguez reported on how to negotiate your rent during the pandemic. ‘Some folks are finding, ‘Oh, hey, the pandemic has been so hard hitting that rents across the street from me in a vacant apartment are lower than they used to be even a year ago.’”
“If rent across the street is a few hundred dollars lower than what you’re paying, ask your landlord if they’ll consider knocking off the same amount. If you owe back rent that’s building up, agree to pay a percentage. ‘We’ve heard from a lot of tenant groups that tenants have had success saying, ‘Hey, I know I owe you $6,000. Let me let me pay you $5,000 or $4,000 of it, and can you forgive me on the rest?’”
“Many tenants have it hard right now, but so do many landlords. ‘I was hearing from one landlord who had $100,000 of non-payments. The trash bills are going up because people are home more. Water bills are going up. It’s really rough.’”
“Consider asking for a day in court, which is your right as a tenant. Due to the pandemic, we’ll likely see a huge backlog. ‘Any landlord looking at this is going to realize, ‘Oh, dang, we’re not going to see that day in court for a long time.’ And since it’s guaranteed, the tenant can drag it out and drag it out and drag it out.’”
“If rent is bad enough, and you really don’t think you can pay that back rent once moratoriums and eviction protections are lifted, then promise a date that you’ll leave. ‘You can use that promise of a date, which to a landlord is essentially a promise of when they can make money again, to negotiate down your back rent. It’s a great way to say, ‘I can pay you a certain amount.’”