The largest publicly traded multifamily landlord in the country offered New York tenants $600,000 in concessions in the first quarter of 2016 as a wave of new apartments on the market empowered renters.
Equity Residential, the Chicago-based real estate investment trust headed by Sam Zell, which earns about 20 percent of its revenue in New York, saw its revenue growth in the city fall by about a half a percentage point over the quarter, said COO David Santee on an earnings call, Bloomberg reported.
“New York City just turned very quickly and more deeply than we expected,” Santee said, according to the news service. “We had to join the concession party to close deals.”
Manhattan landlords offered incentives on about 14 percent of new leases in March, up 4.8 percent from the same time the previous year, according to appraiser Miller Samuel and brokerage Douglas Elliman. Agreed rents came in about 2.2 percent below asking rents last month, as vacancies rose to 2.42 percent, a nine year high.
“There’s some crazy stuff going on in New York,” Santee said, according to Bloomberg.
The driving force behind the rise in concessions is a boom in new rental supply. About 6,700 new units are expected to hit the city’s rental market this year, the most since 2005, according to Citi Habitats. Most of those will be aimed at the top end of the market, roughly the top 10 percent. Median rent in that group was down 3.5 percent in March from last year’s rates, according to Miller Samuel and Douglas Elliman.