Manhattan rents rise, skewed by more demand for larger apartments

Median net effective rent rose 0.4 percent in May

New York /
Jun.June 14, 2018 08:30 AM

Manhattan, Brooklyn. and Queens Market Report
Charts (Credit: Douglas Elliman)

Following five consecutive months of decline, Manhattan saw its first increase in rent thanks to a growing demand for larger apartments.

The median net effective rent, which accounts for concessions, rose 0.4 percent year-over-year in May to $3,392, according to Douglas Elliman’s latest rental report. But the trend was largely driven by the surge in new leases for larger apartments, as the high-end sales market remains soft, the report said.

“You’re seeing some of that decline in sales demand being translated into people taking advantage of rentals,” said Jonathan Miller, CEO of appraisal firm Miller Samuel and the author of the report. “The market is still soft and that has presented an opportunity for people [who] are temporarily pausing in the purchase process” as they evaluate the new tax law and higher interest rates.

Meanwhile, 37.6 percent of new leases included landlord concessions — the lowest level this year and down from 44.3 percent in April. That’s primarily due to seasonality, as the rental market heads into the stronger summer season, Miller said. Given that concession market share has been rising year over year for 36 consecutive months, incentives are “still a significant factor,” he added. It would take a serious decrease in the amount of supply coming to the market every month to dislodge them, industry players recently told The Real Deal.

 

A separate report by Citi Habitats noted that as the vacancy rate has declined for over six months, the use of move-in incentives has also recently dropped. The last time the firm saw vacancies fall for such a stretch of time was between December 2013 and June 2014.

“Through their effective use of concessions, owners have dramatically reduced the vacancy rate over the last six months,” Gary Malin, president of Citi Habitats, said in a statement. “Since February, they have begun to dial back the freebees offered to new residents — while keeping their face rents relatively unchanged.”


Related Articles

arrow_forward_ios
Mack Real Estate CEO Richard Mack and one of his new hotels at 51 Nassau Street. (Getty, ING)
Mack Real Estate takes over 7 distressed Manhattan hotels
Mack Real Estate takes over 7 distressed Manhattan hotels
1440 Broadway and CIM Group’s Shaul Kuba (Google Maps, Getty)
CIM closes on $400M refi for 1440 Broadway
CIM closes on $400M refi for 1440 Broadway
Theaters in some cities are opening with restrictions. (Getty, Photo Illustration by Alison Bushor for The Real Deal)
Coming attraction: Movie theaters reopen in New York, San Fran
Coming attraction: Movie theaters reopen in New York, San Fran
Innovo Property Group's Andrew Chung with 23-30 Borden Avenue in Long Island City (Google Maps)
Innovo lands $155M construction loan for LIC warehouse
Innovo lands $155M construction loan for LIC warehouse
Restaurants and bars accounted for a majority of the gains in February (iStock)
Leisure, hospitality big winners in February job gains
Leisure, hospitality big winners in February job gains
The company currently operates 761 stores, and intends to open 100 new stores this fiscal year. (iStock)
Retailer Burlington plans to double store count
Retailer Burlington plans to double store count
(Getty, Photo Illustration by The Real Deal)
Retail had its reckoning. Will subleases flood the market?
Retail had its reckoning. Will subleases flood the market?
Ascena owns Ann Taylor, Lane Bryant, Lou & Grey and Cacique. (Getty)
Ascena restructuring approved post-bankruptcy
Ascena restructuring approved post-bankruptcy
arrow_forward_ios

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

Loading...