Equity Residential offering incentives, trimming revenue forecasts in Q1: COO

Rental supply glut causing massive landlord to “join the concession party"

New York /
Apr.April 28, 2016 08:01 AM

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.

At a REIT conference earlier this month, Zell said that while the U.S. economy was doing well the cycle “is in the 9th inning.” [Bloomberg]Ariel Stulberg


Related Articles

arrow_forward_ios
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
Matt Lauer exposes Hamptons estate to the market
 Fredrik Eklund and the property (Getty, Steve Frankel)
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Fredrik Eklund lists Bel Air mansion for rent as family moves to “forever home”
Gordon Ramsey and his Lucky Cat restaurant (Lucky Cat)
Gordon Ramsay to open first South Florida restaurant in Miami Beach
Gordon Ramsay to open first South Florida restaurant in Miami Beach
A photo illustration of Blackstone president Jon Gray (Getty, Blackstone)
Asian investor selloff led to Blackstone raising the gates
Asian investor selloff led to Blackstone raising the gates
From left: 290 Park Place and 28 Willow Street in Brooklyn (Getty, Google Maps)
Historic townhouses top Brooklyn’s luxury market
Historic townhouses top Brooklyn’s luxury market
Rudin Management's Bill Rudin and 3 Times Square (Getty, Epicgenius, CC BY-SA 4.0 - via Wikimedia Commons)
Accounting firm leases at Rudin’s 3 Times Square
Accounting firm leases at Rudin’s 3 Times Square
From left: SL Green's Marc Holliday and Roc Nation's Jay-Z along with a rendering of the proposed Caesars Palace Times Square project (Getty Images, SL Green Realty Corp)
Jay-Z joins SL Green, Caesars casino bid
Jay-Z joins SL Green, Caesars casino bid
50 West 66th Street and the One57 building at 157 West 57th Street (Extell Development, One57)
Extell properties top Manhattan’s luxury contracts
Extell properties top Manhattan’s luxury contracts
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...