The Real Deal New York

Manhattan rental concessions fell for the first time since 2015

With more would-be buyers turning to the rental market, metrics are showing improvement
By Meenal Vamburkar | February 14, 2019 07:00AM

(Credit: Unsplash and Miller Samuel)

Manhattan’s rental market has broken its nearly four-year streak of rising concessions.

The market share of landlord incentives was 44.5 percent in January, down from 49.3 percent a year earlier, according to Douglas Elliman’s latest market report. The slide came after 43 straight months of increases.

“The trend has been so consistent, and now we’re seeing this stretch being broken,” said Jonathan Miller, CEO of appraisal firm Miller Samuel and author of the report. “I see it being a choppy trend from here.”

Median net effective rent in January was $3,320, a 5.7 percent increase from a year earlier. At the same time, days on market dipped 5.6 percent.

The improving metrics in the rental market are largely a function of would-be buyers who remain on the sidelines, Miller added. As more people hold off on purchases — thanks to concerns about economic uncertainties — they are camping out in the rental market. Now, enough potential buyers have opted rent for it to push the market upward slightly, Miller said.

“People are being cautious, and that’s logical,” he said. “We could continue to see some strength at the expense of the sales market.”

In a separate report, Citi Habitats said the vacancy rate declined for the first time in four months. In January, the Manhattan vacancy rate was 1.52 percent, down from 1.6 percent in December. The rate was 1.91 percent in January 2018. Washington Heights, with a median rent of $2,337, was the least expensive neighborhood.