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Rental Glut Makes NYC the Worst Performer for Equity ResidentialBy
Equity Residential has a New York story, and it doesn’t have a happy ending -- at least, not yet.
The metro area, where developers are churning out thousands of new rentals, and tenants have the luxury to bargain, was the only one that showed a decline in rent for the publicly traded landlord in 2017.
"New York was our worst-performing market,” David Neithercut, the firm’s chief executive officer, said on a conference call today. “We still expect New York to be our worst-performing market.”
All told, about 19,000 newly developed apartments will be listed for rent this year in the New York City metro area, the company’s chief operating officer, David Santee, said on the call. Of that total, 62 percent will be in Brooklyn and Long Island City. The discounts that landlords may have to offer to get those units filled might push down rents in Manhattan, Santee said.
Equity Residential’s average rent in the New York area declined 0.3 percent in the fourth quarter from a year earlier, the company reported in earnings results Tuesday. That’s not bad compared to a 5.4 percent decline in northwest Queens, for example, for all apartments rented there in December, according to Douglas Elliman Real Estate and Miller Samuel Inc.
Still, none of the other markets in the firm’s portfolio -- which also includes Los Angeles, San Francisco, Seattle, Boston and Washington, D.C., among others -- posted a decline in rent.
For 2017, net operating income from the New York area fell 1.8 percent -- also the only negative result in a single market.