Are there 15,000 people who want to live in Manhattan?
Another historic surge in the borough’s empty apartments last month underscores the troubles facing landlords across the city.
Manhattan’s vacancy rate climbed to 5.1 percent in August, according to Douglas Elliman’s monthly rental report produced by Miller Samuel Real Estate Appraisers & Consultants.
It’s the first time Manhattan vacancy has reached this level in the 14 years that Miller Samuel has tracked its rental market, and the fourth consecutive month that the number of uninhabited rentals have set a new record. The vacancy rate first hit an all-time high in June.
Jonathan Miller, the author of the report, said the steep increase in vacancy is a product of the March Covid spike and shutdown of the city, which inspired 420,000 New Yorkers to leave town.
“The second you remove the immediate cultural benefits of dining, and the arts … and the ease of getting around … That was an offset to living in a small space [and] paying more money,” he explained. “When you remove that, that value imbalance became more apparent to some consumers and you have this outbound migration.”
If the citywide vacancy rate were to surpass 5 percent on the next official survey, in 2022, the city’s “housing emergency” would technically be over, but lawmakers would likely change the threshold to preserve the designation and, hence, rent regulation.
Though Miller’s report only tracks vacancy in Manhattan, landlords and their brokers across the city struggled to find tenants last month, despite offering significant discounts and concessions. As a result, the number of apartments for rent is ballooning throughout the city and landlords cannot rake in the profits they once did.
In northwest Queens, new leasing activity fell 31.5 percent year-over-year to 213 deals. The median rental price dropped 8.5 percent to $2,622 from $2,866 in August 2019.
The number of deals with concessions or owners paying the broker fee jumped to 59 percent last month from 36 percent a year earlier. Meanwhile, listing inventory ballooned by 78 percent to 642 apartments for rent last month, up from 360 the year before.
Manhattan saw new leases signed fall 24 percent to 4,990 from 6,544 the previous August. Of the deals that did happen, 54 percent included concessions such as a month of free rent or no broker fees from just 32 percent a year before. Miller said that was the largest share of Manhattan deals with sweeteners in more than a decade.
Listing inventory in the borough also hit a new high for the third month in a row with more than 15,000 apartments for rent. That’s a 166 percent increase over the 5,645 apartments that were on the market in August 2019.
The median rental price fell 7.7 percent year-over-year to $3,161 from $3,423. The largest rent drops were for studios and one-bedrooms which fell to $2,500 and $3,300, respectively.
In Brooklyn, the number of apartments on the market hit a record high for the second month running with 3,890 units listed, a whopping 130.5 percent increase compared to the 1,688 listed the previous year.
But the borough fared better than Manhattan and Queens when it came to leasing and pricing.
The number of new leases signed in Brooklyn only dropped 2.2 percent to 1,619, while the share of those deals with concessions was only 43 percent compared with 38 percent in 2019. The median rental price of $2,878 was down a mere 1.4 percent from the previous year.
Miller said it marked the continuation of Brooklyn’s “outlier” status in the city’s housing market.
“The rental market is not deteriorating as fast,” he said. “It’s very contrarian … Manhattan is the laggard for now.”