The Real Deal New York

BK rents decline as landlords drop prices

Net effective rents in the borough dipped for the second consecutive month
By Miriam Hall | July 13, 2017 07:00AM

The Brooklyn Bridge

The Brooklyn rental market continues to weaken, with the borough’s prices falling for the second month in a row.

In Brooklyn during June, the median net-effective rent, which takes concessions into account, declined nearly 2 percent year-over-year to $2,813, according to the monthly rental report from Douglas Elliman. However, the median face rent — the figure landlords advertise — also declined one percent to $2,850. Concessions, which landlords have relied on to keep face rents from dropping, were included in 17 percent of new leases signed last month but are no longer increasing.

“Brooklyn continues to be the weaker of the three boroughs, in the general sense,” said Jonathan Miller, the CEO of appraisal firm Miller Samuel, and author of the report. “Concessions have stopped rising … landlords are pricing a little bit lower than they had been.”

The median rent for a studio in Brooklyn in June was $2,351. The median luxury rental price was $5,755, while the new development price hit $3,363.

“Rental inventory keeps coming into the market,” said Miller. “It’s the 22nd month in a row of rising inventory,”

In Manhattan, the rental market remained steady last month. The median face rent for the borough in June was $3,500, a year-over-year decline of 1.6 percent. When taking concessions into account the median rental price was $3,410, a nominal change from June 2016. “If the market continues to soften, we will see more declines in median rent,’ said Miller. “Face rent in 2017 has been down in four of the last six months on a year-over-year basis.”

Concessions were used in 24 percent of new leases signed in June, more than double the rate during the same time last year, but below the record of just under 31 percent. The median rent for a Manhattan studio was $2,600, unchanged from this time last year. However, the luxury median rent dropped over 6 percent from last year to hit $7,949.

In Queens, the rental market has been choppy in recent months. The median face rent hit $2,903, a four percent increase year-over-year. The net-effective rent was $2,822, up two percent. However, there’s been a heavy influx of new development product in the borough, which drives up median rents. “Over the last couple of years, half the time rents are up, half the time they are down,” said Miller, who added that, overall the borough is performing better than Brooklyn.

The use of concessions is the highest in Queens out of all the boroughs. More than 38 percent of leases there included concessions last month.

The median rental price for Queens studios checked in at $2,590, according to the report, a nearly five percent increase year-over-year. Meanwhile, the luxury median rental price hit $4,650, a nearly four percent increase from this time last year.

A report from brokerage Citi Habitats found the rental market conditions shifted further to tenants’ favor throughout June, which is unusual for summer. According to Citi Habitats, 28 percent of new leases signed with the firm in June included some form of concession, up from 22 percent in May.