The number of new residential leases signed in Manhattan reached 7,061 in August, a 12 percent increase over last year and a nine-and-a-half year high, according to the new monthly rental report from Douglas Elliman.
However, according to the report, the annual vacancy has gone up in the borough, driven by an increase in new development inventory.
“We are seeing a pushback on renewals,” said Jonathan Miller, the CEO of appraisal firm Miller Samuel and author of the report. New development hitting the market means leasing activity is not keeping up with rising inventory. “With the amount of supply that is coming in … I wouldn’t be surprised if the concession rate continues into next year.”
The median rental price in the borough remains at what Miller calls a “high plateau,” with the median rent after concessions sitting at $3,377 last month, which is flat on last year. Miller said, however, the average size of rental apartments increased last month, which is why face rents actually went up. Manhattan leases with concessions signed last month hit 24 percent — which is double what it was this time last year.
“Much of the new development is skewed to the high end, yet current demand is for smaller units,” he said.
Miller believes Manhattan concessions have stabilized. But in Brooklyn, he expects concessions will last longer. “There’s still room for [concession] expansion,” he said of the borough. “They will continue to be a significant part of the rental market over the next two years.”
Taking rental incentives into account, the median rental price in the borough was $2,851, according to the report, and marks the fourth month in a row that rents have declined. Concessions made up 20 percent of new leases.
In Queens, after five months of increases, net effective rents declined to hit $2,764. Just over 44 percent of leases signed in the month of August had some form of concession, mainly because there’s so much new development in the borough.
“Apartment seekers are increasingly flexible as to what neighborhoods they will live in, but in terms of the apartments themselves, more selective,” said Gary Malin, president of Citi Habitats. “Tenants are not willing to overpay for a prime location, and have come to expect a good deal.”