Manhattan residential vacancy rate continues upswing, concessions expected to follow suit
Gary Malin, president of Citi Habitats
Manhattan’s residential vacancy rate increased to 1.24 percent in October, the third consecutive month that the rate has surpassed 1 percent, according to October rental data released today by residential brokerage Citi Habitats. That number, however, is lower than in October 2009, when the vacancy rate was 1.86 percent.
“Seasonally, we would expect vacancies to rise at this time of year,” said appraiser Jonathan Miller, who prepares a quarterly market report for Prudential Douglas Elliman.
As for where vacancy rates may be headed in the coming months, Miller said he doesn’t foresee a drastic change following October’s relatively low numbers. “Three months in a row at a low level doesn’t suggest much of a change in the near future other than seasonality,” he said.
The Citi Habitats report shows that year-over-year, October’s rents jumped slightly. Last year, prices for studio, one-, two-, and three-bedroom units were $1,731, $2,384, $3,307 and $4,494, respectively.
There was a slight drop in rents last month compared to September, except for studio units, which remained unchanged, averaging $1,837 per month.
Rents for one-, two- and three-bedroom units all decreased by 1 percent. The average rent for one-bedroom units was $2,509. Two-bedrooms rented for an average of $3,459, and rents for three-bedrooms averaged $4,618.
The Citi Habitats data also shows that the Tribeca and Soho neighborhoods combined had the lowest vacancy rate in October, at .73 percent.
“Those are great areas that are always in high demand, even in off times and in a tight marketplace,” said Gary Malin, president of Citi Habitats.
As for how the rental market will fare in the coming months, “the use of concessions is expected to rise at the end of the year,” he said.
As winter approaches, sellers traditionally become more negotiable with prices and offer concessions to do deals, Malin said.
The increase in the vacancy rate, Malin said, “is par for the course — not something that people didn’t expect to see” at this time of year.
This winter, Malin predicted, there will be “price reductions and an increase in concessions.”
In October, landlords in 17 percent of transactions brokered by Citi Habitats offered a free month’s rent and/or payment of the broker’s fee, compared to 25 percent in September and 20 percent in August. The peak for owner-paid incentives was in December 2009, when close to 60 percent of apartments rented by Citi Habitats included a concession.