It’s a renter’s market in Brownstone Brooklyn, according to a report released last week that found “dramatic” reductions in residential rents in the third quarter.
Over 50 percent of new leases signed in tony neighborhoods like Park Slope and Brooklyn Heights during the third quarter were below previous rental amounts — some by as much as 18 percent, the report, by Garfield Place-based Brownstone Homes indicates.
“This has been a particularly challenging year for Brooklyn landlords,” said Josh Blackman, a broker with Brownstone Homes. “With the increase in rental apartments on the market, some tenants demand rent reductions, and rather than chance apartment vacancies, some landlords agree to reduced rents.”
The situation has the potential to create a vicious cycle. “When rents don’t rise — or worse, when apartments stay vacant — landlords who carry high mortgages face the danger of default,” Blackman said.
The report, based on databases maintained by the company, and its parent Brownstone Management,examined apartments that were rented, or not rented, in the third quarter of 2009.
Brooklyn rents have fallen, in part, due to mounting job losses, and because of the conversion of unsold condominiums and foreclosed homes into rental property, the report states. Apartments that do rent are generally taking longer to find tenants, and are sitting idle longer. “The increase vacancy rate is, in part, the result of mismatched expectations between landlord and renters,” the report states.
A full 52 percent of Brooklyn leases signed during the quarter included rent reductions, ranging from 1 percent to 18 percent.In Park Slope, 50 percent of rents declined, with monthly rents falling from 5 percent to 13 percent.In Brooklyn Heights, 50 percent of rents declined and 25 percent were unchanged from the prior year, while rents fell 5 percent to 14 percent.
In Park Slope one-bedroom apartments that used to go for $2250 are now renting for $1950, Blackman said. In Brooklyn Heights, one-bedrooms that went for $2700 are now going for $2300.
InCobble Hill, Carroll Gardens, Fort Greene and Prospect Heights, 33 percent ofrents declined, while rents fell one percent to 18 percent. In Flatbush, Sunset Park, Vinegar Hill and Red Hook, 60 percent of rents declined, while rents fell from fiver percent to 13 percent, the report shows.
“While the brownstone neighborhoods tend to hold their own better, even in these small inventory, highly desirable neighborhoods we are seeing declines in rent as well,” Blackman said. He said that in the short term, rents will continue to decline, as it is traditionally more difficult to rent in the colder weather months.“In the coming months, it will be worse,” he said, but adding that he was optimistic on the sales side of things.
The Brooklyn data reflects a national trend.The Wall Street Journal found that rents are falling faster than any time in the last decade, and the apartment research firm Axiometrics Inc., a reported a New York City rental decline of 10.8% for the second quarter of 2009, Blackman noted.
