At this point, it seems like concessions at New York rentals set new records almost every month.
In January, the number of deals with concessions hit 47.5 percent in Brooklyn and 50.8 percent in Queens, records that lasted all the way until March, when deals with concessions shot up to almost 48 percent in Brooklyn and 63 percent in Queens, according to Douglas Elliman market reports. In Manhattan, the number of new leases with concessions also hit a high in January at 49.3 percent, although this figure has stabilized in recent months.
Although a recent StreetEasy study found that renters are less likely to find price cuts during the summer, when units tend not to stay available for as long, multiple real estate experts said that concessions are too ingrained in the market at this point for typical seasonal trends to make a dent. It will take a significant decrease in supply or face rents to dislodge them.
“Some locations may see a modest uptick, a modest decline, or stay flat,” said Jonathan Miller, CEO of the appraisal firm Miller Samuel and author of the Elliman reports, “but I don’t see it as a respite for the need for concessions because every month that goes by, there is more product entering the market.”
Miller described the seasonal perspective on concessions as “outdated.” Although he noted that their growth might level off over the summer, he did not see this as having much of an impact on their annual rate. More permanent changes will likely not come until or unless asking prices drop. It is too late to do anything about excess supply at this point, according to Miller.
“The idea of supply coming in slowing down I think is a fantasy,” he said. “A lot of what’s coming out now was planned a few years ago. It’s not like they can turn off the tap.”
Eric Benaim, CEO of Modern Spaces, took a more reserved stance. He said that while concessions are still very much a part of the market, his brokerage had already started to see their length decrease. In the winter, it was common for tenants to get offered two or three months of free rent, but that is now creeping back down to one month, which he said has become the standard policy at most new buildings.
Modern Spaces has a particularly strong presence in Long Island City, where Benaim said concessions were higher in the fall in part because several projects were opening up at the same time, such as Jackson Park, ARC and the Forge. He echoed Miller’s point that this increased supply had made concessions a more permanent fixture of New York’s rental market, regardless of the season.
In years past, Benaim said, it was generally standard to see developers just offer one month of free rent during the offseason.
“Now, you’re seeing one month free during the peak season,” he said, “and I’m assuming once the fall comes and the season’s over, you’ll probably see concessions jump up again.”
Last year, the share of concessions in Brooklyn, Manhattan and Northwest Queens periodically rose and fell throughout the summer. They were included in an average of 23.1 percent of deals in June, a number that ticked up to 26.3 percent of deals in July before falling back to 24.2 percent of deals in August. Numbers throughout the winter have been significantly higher, reaching 49 percent in January, 47.6 percent in February and 44.1 percent in March.
“There’s generally more demand for apartments during summer,” said Grant Long, senior economist at StreetEasy. “There’s more competition, and things like price cuts and concessions tend to go down over the summer.”
Long argued that this trend will hold despite the explosive popularity of concessions, saying it would still be fairly easy for landlords to offer concessions in April and then take them away in June once demand starts to go up.
“Concessions are definitely part of the market that’s here to stay,” he said, “but they’re still going to be subject to the same sort of seasonality we see in many other factors that divide the market from month to month.”