The Real Deal New York

Manhattan rents drop for first time in 2 years

Brooklyn rental and sales prices on the rise

April 07, 2016 08:00AM
By Kathryn Brenzel

From left:

From left: 98 Dean Street in Boerum Hill, the Larstrand in Upper West Side 

It’s finally happened: Manhattan rents have hit a snag.

For the first time in two years, the median residential rental price has decreased in the borough, according to a new report by Douglas Elliman. The median rent in March dropped to $3,300, a 2.8 percent decrease from March 2015. Over the last few months, the rate of price growth slowed, preluding a rental flatline.

“One month doesn’t make a trend, but you could see this coming,” said Jonathan Miller, president of Miller Samuel and author of the Elliman report. “Rent can’t rise indefinitely. We’ve had this two years of growth and very modest or little wage growth.”

The signs were there: the percentage of new rentals with concessions has more than doubled from last year, reaching 13.6 percent. The vacancy rate and listing discounts are also on the rise. If the local economy wasn’t so strong, landlords might have more to worry about. For now, though, the slowdown just means that prices have reached the affordability threshold and likely won’t dramatically increase or decrease in the foreseeable future (barring economic crisis, of course).

“I think what this symbolizes or suggests is that we’re probably going to see a market that moves sideways,” Miller said. “I suspect it’s going to bump up and down.”

Sales in Manhattan busted records in the first quarter of 2016, with the average residential price tag hitting $2 million for the first time in the borough, The Real Deal reported earlier this month.

Meanwhile, in Brooklyn, the median rental price increased 2.7 percent to $2,775 from last year. Sales are also on the upswing in the borough. In the first quarter of 2016, the median sales price increased to $662,431, a 8.4 percent increase from the same quarter last year. This is the second highest median price ever recorded in the borough and the 14th consecutive quarter with a year-over-year increase, according to a separate report by Douglas Elliman. Inventory dropped 30.3 percent to 2,860 from last year, and the number of days on the market dropped down to 70 days, a 37.5 percent decrease from the first quarter of 2015.

Frank Percesepe, executive vice president of the Corcoran Group’s Brooklyn division, said that the lack of supply — especially on the lower end of the market — is driving up prices in the borough.

“It really is the lack of supply that continues to drive the prices up,” he said. “Anything under a $1 million would be so welcome.”

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