With a weakening luxury market, it’s taking longer to find takers for rentals in Manhattan.
Units spent an average of 56 days on the market in February, a 14.3 percent year-over-year increase from 2014, according to Douglas Elliman’s latest rental market report. The jump in marketing time coincides with the continuing slowdown of rental prices in the borough. Prices are being kept high by a deluge of landlord concessions, but the pace of growth has slowed considerably.
“There’s just been a steady progression of a cooling since the summer,” said Jonathan Miller, president of Miller Samuel and author of the Elliman report. “I think affordability is at play. The demand is still strong because the local economy is still strong, but the growth of pricing over the last couple of years has pushed some of the demand outwards to areas that are more affordable.”
Median rental price increased a paltry 0.2 percent to $3,382 from February 2014 to February 2015, according to the report. The slight increase marks the 24th consecutive month of price increases in the borough but also continues the trend of marginal growth. In January, the year-over-year median rent increase was only 1.5 percent. Due in part to high rents, the volume of landlord concessions doubled in February. The number of new leases with concessions reached a whopping 19.1 percent, a new five-and-a-half-year high, according to the report.
In a separate report, Citi Habitats noted that 25 percent of rentals offered free rent for a month and/or payment of the broker fee to lure tenants. The percentage of new leases that offered concessions was the highest the firm has seen since July 2010, when it reached 25 percent.
“Many landlords have relied upon incentives to keep their face rents high,” Gary Malin, president of Citi Habitats, said in a statement. “Their prevalence is indicative of a Manhattan rental market that is still out of touch – and beyond the reach of many tenants.”
In an interview with The Real Deal, Malin noted that February is typically a slow month for the rental market, so the spring could bring more demand. He said that the month-to-month drop in vacancy rate was a promising sign that demand is still strong. According the Douglas Elliman report, the vacancy rate dropped from 2.8 percent in January this year to 2.3 percent in January. Year-over-year, vacancy fell from 2.4 percent to 2.3 percent.
Meanwhile in Brooklyn, median rents rose to $2,787 in February from $2,598, a 7.3 percent year-over-year increase, according to the report. Landlord concessions more than doubled, reaching a five-year high by being applied to 12.9 percent of new leases. In Queens, median rents rose considerably: from $2,600 in February 2015 to $2,954 in February 2016.