December freeze brings concessions back to rental market
Landlords in Manhattan and Brooklyn acted aggressively at the sluggish end of 2013 in an effort to boost building occupancy, even if that meant making concessions, according to Jonathan Miller, president and CEO of Miller Samuel.
The traditional winter slowdown forced median rents down in December for the fourth straight month, after a 27-month period of increases, according to Douglas Elliman’s monthly rental market report released today.
The median rent for a Manhattan apartment dropped 1.6 percent to $3,100 per month from $3,150 in December 2012, per Elliman.
“We’ve had unexpectedly robust sales,” said Miller, who compiled the Elliman report. “The release of pent-up demand pulled people out of the rental market who had been on the fence about buying.”
Although the average landlord concession was consistently the equivalent of one month’s rent in December, the use of concessions increased to 12.8 percent of all lease deals, the Elliman report said. This marks a 4.3 percent year-over-year increase.
Tight credit, which prevents people from acquiring mortgages and buying houses, is expected to continue pushing up demand for rentals, and thus rental prices, in 2014, Miller said.
When it came to types of apartments, two-bedrooms saw the biggest price increase, with the median monthly rent rising 4.7 percent to $4,813 from $4,595. Rents for studios, one-bedrooms and three-bedrooms were roughly steady over the same period in 2012.
But across the board, the number of new transactions in Manhattan fell hard, with declines of 26 percent for studios, 23.7 percent for one-bedrooms, 32.9 percent for two-bedrooms and 34.9 percent for three-bedrooms. Leases at new developments saw an even stepper plunge, with transactions dropping 60.8 percent year-over-year, to 124 from 316, Elliman data showed.
The Manhattan rental vacancy rate peaked in December at 1.82 percent, up from 1.74 percent the previous month and 1.37 percent in December 2012, according to Citi Habitats’ rental market report released today.
“The economy and the lack of hiring have had a huge impact on the rental market and the slowdown at the end of last year,” Gary Malin, president of Citi Habitats, told The Real Deal.
The average Manhattan renter paid 2 percent more for an apartment than he or she did in 2012, the Citi Habitats report said.
In Brooklyn, listing inventory more than doubled, to 1,611 listings from 780. The median rent there in December was $2,660 — an increase of $23 per month, according to Elliman.
The priciest apartments in Brooklyn were two-bedrooms in Dumbo, averaging $5,153 per month, while the cheapest were studios in Bay Ridge, averaging $1,212 per month, according to MNS’ December rental market report.