Manhattan rents unseasonably strong, even as incentives rise
The Manhattan residential rental market saw an increase in vacancy rates and incentives for tenants, while rents rose from December, in what is usually the slow-as-molasses month of January, according to a monthly rental market report from Citi Habitats released today.
“Absent any seismic changes I think it’s just going to be another strong, stable market for the landlord [this year],” said Gary Malin, president of Citi Habitats. “It would take a real change in the economy to change [the market] to the tenant’s favor.”
Rents were up 5 percent over all apartment sizes year-over-year in Manhattan, according to numbers from the brokerage (see chart below), though the vacancy rate was up slightly as well, to 1.3 percent. The average price of a Manhattan studio was $1,967, whereas the average for a one-bedroom was $2,652. The average two-bedroom in Gotham rented for $3,762, and the average three-bedroom $5,026. In all categories average rents increased by between 4 and 6 percent, the report says.
Malin speculated that the strong numbers could be due to renters renewing leases in uncertain job and mortgage climates. He also said that lower Wall Street bonuses could propel the rental market further as financial services executives put off purchasing homes and continue to rent.
The January Manhattan vacancy rate of 1.3 percent, though up from December’s 1.27 percent, and January 2011’s 1.26 percent, is still quite low, Malin noted. Vacancy was highest last month on the Upper West Side with a rate of a 1.61 percent, according to the report, and lowest in the Soho/Tribeca region at 0.4 percent.
As for incentives, in 13 percent of deals in which Citi was a broker there was a month’s free rent given or the broker’s fee was paid. In December 2011, that percentage was at 11 percent, and in January 2011 it was 21 percent. The decrease in incentives year-over-year was due to increased demand as Manhattan’s market rebounded, Malin said.
Malin is confident that with considerably lower unemployment than in the rest of the country, New York City rents will stay strong in the coming year. “People will come here looking for jobs, and they’ve got to have a place to live,” he said.