Nov. 11 (Bloomberg) -- Manhattan apartment rents fell as much as 9 percent in October from a year earlier as unemployment cut demand and landlords lowered rates, according to Citi- Habitats Inc.

Average rents dropped for all apartment sizes and the vacancy rate rose 0.15 percentage point to 1.86 percent, the highest since November 2008, the New York-based property broker said today in a report.

“As soon as the economy shifted and people got laid off and got no bonuses, landlords had no choice but to reduce asking prices,” Gary Malin, president of Citi-Habitats, said in an interview. “We expect rents to decrease in the next few months and vacancy rates to creep upward.”

New York City’s jobless rate reached 10.3 percent in September and the number of private-sector jobs lost in the previous year totaled 111,700, according to data on the New York State Department of Labor’s Web site. Wall Street companies lost $42.6 billion last year and income tax receipts were down 24 percent through August, according to the state comptroller’s office.

Concessions such as a month’s free rent or landlords paying real estate brokers to find tenants have helped lure renters, Malin said. Citi-Habitats in on pace to break last year’s record of brokering more than 10,500 apartment leases, he said.

Manhattan studio rents declined 9 percent from October 2008 to an average monthly rate of $1,901, Citi-Habitats said. One- bedroom apartments fell 7 percent to $2,563. The cost of renting a two-bedroom decreased 8 percent to $3,605 and rents fell 6 percent to $4,774 for three-bedrooms.

On the Upper West Side, the average rent for studios fell 13 percent to $1,786 while one-bedrooms dropped 10 percent to $2,398. The cost of a two-bedroom fell 4 percent to $3,485, according to Citi-Habitats.

Downtown rents in the SoHo and TriBeCa neighborhoods declined 14 percent to $2,067 for studios; 13 percent to $3,187 for one-bedrooms and 4.5 percent to $4,998 for two-bedrooms.

SoHo/TriBeCa had the lowest vacancy among Manhattan neighborhoods at 0.95 percent while the Upper East Side was highest at 2.41 percent, Citi-Habitats said. The rate was 2.06 percent in the Battery Park City/Financial District, 1.93 percent on the Upper West Side and 1.3 percent in Chelsea.

The data is based on more than 1,000 closed transactions in October handled by Citi-Habitats.

To contact the reporter on this story: Dan Levy in San Francisco at dlevy13@bloomberg.net.

Last Updated: November 11, 2009 11:04 EST