Landlords are increasingly shelling out concessions to renters in Manhattan as supply continues to outpace demand for ultra-luxury apartments.
The share of new leases with landlord concessions last month was more than double seen at the same time last year, according to Douglas Elliman’s latest market report. Nearly 11 percent of the new leases — compared to 5.3 percent in July 2015 — provided concessions to tenants. At the same time, the vacancy rate last month — 2.5 percent — was the highest seen for July in the last nine years, according to the report. Listing inventory also jumped to the highest level in more than seven years, reaching 7,681 — a 30.3 percent year-over-year increase.
These record highs are symptomatic of a market that continues to be “soft at the top,” said Jonathan Miller of Miller Samuel , the author of the Elliman report. Supply is outpacing demand for luxury rentals, and so prices have leveled off, he said. The median rental price hit $3,450, a mere .9 percent year-over-year increase.
“For all of 2016, rent growth has been dancing around zero percent,” Miller said. “There’s a sort of continuing theme. There is price growth, but it’s nominal.”
In a separate report, Citi Habitats reported that the borough’s vacancy reached 1.9 percent, the highest rate the brokerage has reported for July since it started tracking the stat in 2002. The brokerage also reported that 19 percent of rental transactions it brokered last month offered free rent for a month and/or payment of the brokers’ fees.
The market in Brooklyn tells a similar story. The median residential rent fell to $2,826, the first decline so far this year, though only a .8 percent drop from the same time last year, according to the Elliman report. The share of new leases with landlord concessions reached 9.5 percent, almost double the 5.6 percent seen in July 2015. Like Manhattan, listing inventory in Brooklyn hit a seven-year high of 2,424.
Meanwhile, in Queens, the median rental price was $2,768, an 8.2 percent decrease from the same time last year. Miller noted that the price fluctuation is primarily due to the mix of new development in the northwestern section of the borough.