Manhattan Rents Hit Pause in August for Breath

Demand for apartments appears to be stabilizing, with prices leveling off following months of growth.

Manhattan Rents Hit Pause in August for Breath

Demand for apartments appears to be stabilizing, with prices leveling off following months of growth.

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Good morning. Manhattan rentals hit the pause button in August as prices hovered near record highs. Las Vegas Boulevard welcomes new open-air retail, and post-Labor Day office returns underwhelm across major U.S. cities.

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Market Snapshot

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*Data as of 9/13/2023 market close.


Manhattan Rents Hit a Ceiling as Record Prices Pause for Breath

NYC rents level off

Manhattan's rental market seems to be reaching its limit, with prices in August stalling during a typical hot month for new rentals.

Plateauing prices: The median rent for new leases in August was $4,400, the same as July's record, according to Miller Samuel Inc. and Douglas Elliman Real Estate. This stability in price comes after a significant 7.3% rise from the previous year and a staggering 35% increase since August 2021.

August leasing decline: Typically bustling with renters moving before the school year, August witnessed a leasing slowdown compared to May and June. New lease numbers dipped by 14%, totaling 5,025 for the month. Jonathan Miller of Miller Samuel observed the ongoing decrease in leasing activity as an indicator of the market nearing its peak.

Shifts in the Big Apple: While Manhattan's market is stabilizing, surrounding areas depict varying trends. Brooklyn rents saw a minor drop, with its median rental at $3,850 in August. On the other hand, northwest Queens observed a surge to $3,900, driven by renters being priced out of Manhattan and Brooklyn. Both these boroughs saw a decline of over 40% in new lease numbers from the previous year.


Big picture: Miller believes landlords might slightly reduce prices due to decreasing demand, but significant cuts are unlikely unless prompted by a major economic shock. Even in Manhattan, a prime living spot, renters have their limits, indicating that every hot market, no matter the demand, has its boundaries. So, what's next for those priced out of the Big Apple? The plot thickens.


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NY Developer's Gamble on Las Vegas Retail

New York Developer Gambles on Las Vegas Shift Toward Strip-Facing Stores

BLVD is designed to offer a bird’s-eye view of Las Vegas Boulevard, known as the Strip. (5+design)

Las Vegas Boulevard is experiencing a shift from conventional indoor retail spaces to street-facing locales, all under the vision of NY developer Eli Gindi.

A new vision: Eli Gindi is introducing a novel retail experience on the Las Vegas Strip with his projects BLVD and Project 63. The two-story, 300KSF BLVD, complete with a 100KSF rooftop dining zone, adds a fresh twist to the iconic strip. His investments, especially in the Strip's southern section, are setting a new tourist trend.

Sporting hub: Las Vegas is morphing into a nexus for sports and entertainment. While T-Mobile Arena and Allegiant Stadium already lure visitors, the forthcoming Formula 1 race track and Oakland Athletics relocation up the ante. Gindi's BLVD is strategically positioned to tap into this growing clientele.

Vegas Strip Expanding Attractions

Fierce competition: Despite promising opportunities, the retail and dining market in Las Vegas is highly competitive, with an abundance of upscale options. Gindi's projects face the challenge of standing out among the competition and convincing visitors to venture onto the Strip for shopping and dining. The success of a retail center depends on more than just attracting customers—it also relies on a viable financial model, including land prices and cashflow.

Beyond retail: Acknowledging the Strip's potential, Gindi is aiming for more than just shopping with BLVD and Project 63. By bringing in tenants like the Museum of Illusions and offering rooftop dining, these ventures seek to offer unparalleled experiences, distinguishing themselves from conventional retail.


Gindi's gamble: Eli Gindi's investment in street-facing retail on the Las Vegas Strip represents a bold move to capitalize on the city's transformation into a sports and entertainment destination. BLVD's innovative concept and strategic location near major venues position it for success, but competition and the need for unique customer experiences present ongoing challenges.


📖 Read: Despite pockets of economic slowdown, consumer spending, a significant driver of GDP, remains resilient.

▶️ Watch: Dani Romero of Yahoo Finance joins Rachelle Akuffo to discuss how banks may face losses up to $2.5B due to distressed CRE.

🎧 Listen: In this episode of Commercial Observer's Back Story, the team explores declining debt originations and the shrinking number of lenders while analyzing insights from Newmark's Q2 report.


NYC Inches Forward, While TX And CA Retreat

NYC gets small post-Labor Day office bump as California, Texas slide back

Getty Images

Despite expectations for a significant post-Labor Day return to office trend, office occupancy in major cities fell short, signaling another setback for the beat-down sector.

The Sleeping Apple: Despite numerous, high-profile return-to-office initiatives from big-name companies like BlackRock (BX), Meta (META), Robinhood (HOOD), and Zoom (ZM), NYC's post-Labor Day return to office was smaller than expected, with a modest 4.3% increase to 42.5%, falling short of last year's post-Labor Day return of 49%.

Labor Day blues: Dallas, Austin, and Houston all saw a drop in office occupancy rates from the Wednesday before Labor Day to the week after. Dallas saw the largest decline at 2.1%, reaching approximately 52% occupancy. Despite Texas leading the nation in return to office, these declines were not anticipated by office landlords working to maintain property values.

Falling figures: Austin's occupancy dropped to nearly 58%, while Houston was just below 60%. In California, San Francisco's post-Labor Day occupancy decreased by 1.5% to 40%, while LA experienced a 1.2% drop, falling just below 48%. And in Chicago's metro office market, occupancy declined by 0.7 points, settling at 50.6%.


The struggle is real: Across the ten cities tracked by Kastle, average occupancy last week was 40%. Despite hopes for a significant return to work, the reality of office occupancy is not aligning with expectations, posing challenges for office landlords and stakeholders. Since the post-Labor Day return-to-office push fell short of expectations, uncertainty continues to trouble the office sector.


  • AI for IRS: The IRS plans to utilize AI to select and audit 75 large partnerships, including hedge funds and real estate firms.

  • Wealthy playbook: Citigroup’s (C) family office clients, representing $565B in net worth, are actively pursuing direct investments in tech, real estate, and healthcare.

  • Capitol conversion: A vacant office building in downtown DC, formerly controlled by Hines will be sold for $70M, with plans to convert it into live-work loft units.

  • Housing horizon: CA lawmakers have approved Senate Bill 423, which extends a state housing law by a decade to expedite multifamily housing construction in cities that have fallen behind on state-mandated housing goals.

  • Biotech boom: Columbus, OH is emerging as a potential biotech hub due to its strong talent pool and significant investment in lab space and startups, supported by VC funding and NIH grants.

  • Doubling down: Boston Properties President Douglas Linde has stated office developers will need to command rents well above $200 PSF foot to justify new projects despite Manhattan's average asking rent of $75.70 PSF last month.

  • SEC settlement: Crowdfunding platform YieldStreet settled SEC fraud charges for failing to inform investors about risks related to loans backed by already dismantled ships, ultimately costing them millions of dollars.

  • Airport acquisition: Onyx Acquisition IV LLC and Starwood (STWD) bought a 10-property industrial portfolio near JFK for $146M, the first time this portfolio traded hands in 50 years.

  • Affordability crisis: NYC must incentivize residential development to address rising rents and the affordability crisis caused by the expiration of tax abatement programs.

  • Windy City woes: Chicago had the highest distress rate for CRE loans in August among the top 20 US metros.

  • Money never sleeps: In the midst of challenges, Newmark (NMRK) is boldly positioning itself to become a leader in capital markets.

  • Favoring in-person work: Three years after acquiring the Lord & Taylor building from WeWork for $1B, Amazon unveiled its Fifth Avenue office on Tuesday, showcasing a transformed workplace.

  • Cyberattack: MGM Resorts acknowledged a cyber incident on Wednesday, which has majorly impacted U.S. properties for three days, posing a significant risk to the company and its credit.


CPI rent cools for 5th straight month

Although the overall CPI went up in August, it was not driven by rents or shelter costs, which have been steadily declining since their peak in March. And CPI Rent is expected to return to a more typical level by early Spring 2024.

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