Manhattan apartment rents fell as much as 5.9 per cent last month from a year earlier as a record jump in unemployment damped demand, Citi-Habitats said.
Average rents declined for apartments of all sizes and the vacancy rate topped 2 per cent for the fifth straight month, the New York property broker said.
Demand slumped after New York City's unemployment rate climbed to 8.1 per cent in February, the highest level since October 2003 and the biggest month-to-month increase on record.
City Comptroller William Thompson predicted last month that New York City would lose 250,000 jobs before the recession ends.
"There are people who are unemployed, and people not willing to spend the type of money they were willing to spend before and they need to make tough decisions," said Gary Malin, president of Citi-Habitats.
Rents for studio apartments dropped 2.1 per cent to an average of US$1812 ($3070), while those for one-bedroom units fell 5.9 per cent to US$2595.
The cost of renting two-bedroom homes declined 2.2 per cent to US$3631 and three-bedrooms fell 1.6 per cent to an average of US$4670.
The average declines for March don't reflect concessions offered by landlords, such as a free month's rent, that lower the overall cost to tenants, Malin said.
"There is a greater degree of price decline than those numbers show."
The average rent for two-bedroom apartments on Manhattan's Upper West Side fell 8.6 per cent last month to US$3580, while one-bedrooms dropped 2.4 per cent to US$2393.
The price of studios in the neighbourhood climbed 6.4 per cent to US$1966, the report said.
At Trump Place at 220 Riverside Boulevard, 25 apartments were available for rent, 13 for reduced prices, the property listing service Streeteasy.com said.
A 65sq m one-bedroom in the building is listed for US$3800 a month, 10 per cent less than its price last November. The furnished condo is in a Trump property along the West Side Highway that includes a health club and a swimming pool, said Streeteasy.com.
Vacancy rates of Manhattan apartments reached 3.8 per cent in October 2002, according to Citi-Habitats.
Last month's vacancy rate of 2.37 per cent was last seen in Manhattan in the six months between November 2002 and April 2003, when vacancies averaged 2.35 per cent. The broker has been tracking the market since 2002.
Manhattan's East Village had the highest vacancy rates last month with 3.24 per cent of its rental units available, Citi- Habitats said.
SoHo and TriBeCa, both in Lower Manhattan, had the lowest vacancy rate: 1.84 per cent.
- BLOOMBERGBy Oshrat Carmiel