One-third of all Manhattan resi leases in January included concessions

Vacancy in the borough dipped slightly to hit 2% last month: report

TRD New York /
Feb.February 09, 2017 07:00 AM

New York City residential landlords are continuing to rely on renters’ incentives to keep vacancies at bay, a trend that is expected to become more widespread throughout 2017.

The number of leases with concessions reached new highs in January, according to the monthly rental report from Douglas Elliman. In Manhattan, 31 percent of all new leases included some form of concession last month, nearly double what it was a year ago. In Brooklyn, 18 percent of leases had concessions, compared to just 5 percent last year.

“Landlords are trying to strike a balance and that means fine tuning rents to fit market conditions,” said Jonathan Miller, CEO of appraisal firm Miller Samuel and author of the report. He predicts landlords will use concessions even more aggressively in 2017.

“I don’t think we’re at the end of this — nothing is changing and there’s a lot of product coming in,” he said. “The rental market is going to get weaker before it gets stronger.”

In Manhattan, the vacancy rate fell slightly from 2.3 percent from 2.8 percent in January 2016. That’s a sign concessions are working, although they are “painful for landlords,” said Miller.

The borough’s median rental price, after concessions, was $3,259, essentially the same as January last year. Softening in the market continues to be particularly acute at the high end. The median rent of a Manhattan studio was $2,600, a negligible change from last year. But for three-bedrooms, the median price was $5,500, a drop of almost 7 percent. While non-doorman median rent went up 2.8 percent to hit $2,800, the median price for doorman rentals fell back 1.2 percent to $3,750.

Luxury rentals, which account for the top ten percent of the market fell again this month, dropping 5.5 percent year-over-year to a median price of $7,595.

In Brooklyn, the effects of vast amounts of luxury rental product is also being felt. The median rent in the borough was $2,702, after taking concessions into account. That’s a fall of 2.8 percent compared to January 2016, when median rent was $2,779. Just like in Manhattan, the lower end of the market held firm or saw modest gains. But the two-bedroom median rental price was $3,025, a fall of 4 percent year-over-year. For three-bedrooms, it was $3,318, a fall of 8 percent. The luxury market dropped just under one percent to $5,119.

“In the last six months in 2016, you started to see a run-up in Brooklyn in the use of concessions,” said Miller. “Even though the concessions are still less than in Manhattan, the amount of concessions tripled over the year, whereas in Manhattan it doubled.”

The market in northwest Queens continues to be “choppy,” according to Miller. The median rent fell 2.4 percent year-over-year to $2,700. Out of all the leases signed last month, 38 percent included concessions. The concessions are driven by the uptick in new development rentals, which had a market share of 34 percent last month, more than double what it was this time last year.


Related Articles

arrow_forward_ios
217 West 57th Street with Extell Developement's Gary Barnett and Corcoran's Pamela Liebman (Photos via Extell; Barnett via Anuja Shakya)

Extell brings on Corcoran Sunshine to help market Central Park Tower

Extell brings on Corcoran Sunshine to help market Central Park Tower
660 Madison Avenue (Photo via Jenel Real Estate)

Safra family finally begins 660 Madison’s office-to-resi conversion

Safra family finally begins 660 Madison’s office-to-resi conversion
The Northeast is driving gains in building permits and housing starts (iStock)

Northeast drives gains in building permits, housing starts

Northeast drives gains in building permits, housing starts
(Getty, iStock)

Mortgage applications to buy homes decline for fourth straight week

Mortgage applications to buy homes decline for fourth straight week
Public Advocate Jumaane Williams (Getty; iStock)

“It’s compliance warfare”: Industry slams landlord accountability bills

“It’s compliance warfare”: Industry slams landlord accountability bills
Stephen Ross and Time Warner Center (Getty)

Stephen Ross slashes price of Time Warner Center penthouse

Stephen Ross slashes price of Time Warner Center penthouse
Pretium CEO Don Mullen and Ares Management CEO Michael Arougheti (Photos via Pretium; Getty)

Pretium, Ares agree to buy Front Yard Residential

Pretium, Ares agree to buy Front Yard Residential
Brooklyn’s home sales dipped in Q3, but the median home price was above $900K (iStock)

Brooklyn home sales drop by 57%, but prices rise

Brooklyn home sales drop by 57%, but prices rise
arrow_forward_ios

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

Loading...