Womp womp: Rental vacancies and concessions stay high in Manhattan
Incentives in Queens jumped significantly
Though slightly down from last month, the vacancy rate in Manhattan rental apartments in October remained high.
According to Douglas Elliman’s latest market report, the vacancy rate hit 2.5 percent last month. In September, the rate reached 2.6 percent, the highest seen all year. Concessions rose last month, with 28 percent of new leases offering concessions, a roughly 4 percent increase year-over-year. Meanwhile, median rents stayed flat at $3,400 in October, around the same as September.
“We are seeing just general malaise or weakness in the market,” said Jonathan Miller, the CEO of appraisal firm Miller Samuel and author of the report. “The market is soft. We’re seeing a lot of concessions.”
Median net-effective rent in the borough — meaning that concessions were taken into account — continued to fall for the 10th month in a row. October’s median net effective rent was $3,300, down from September’s $3,334, according to the report.
Gary Malin, president of Citi Habitats, noted that the vacancy rate is high in the borough, in part due to a seasonal decline in demand. But he also pointed to landlords who haven’t changed their leasing strategies in a changing market.
“To fill apartments in the current price-sensitive market, owners need to create a sense of value,” Malin said in a statement. “To combat rising inventory, they will likely ratchet up their use of incentives — and potentially lower rents on select units — as we move through fall. For apartment seekers, the coming months are likely good ones to make a move.”
Miller noted that median rents for apartments with doormen and new development rose month-to-month and year-over-year mostly because a greater volume of high-end units hit the market this month. Median rent for new development rentals was $4,688, a 3 percent increase from the same time last year. For “doormen rentals,” the median rent was $3,900, up 1.3 percent year over year.
“It’s a statement on a shift in the mix of products hitting the market, not on the strength of the luxury market,” Miller said.
In Queens, the market share of concessions skyrocketed. The percentage of new leases with concessions rose to 48.3 percent — nearly three times higher than October 2016’s 18.1 percent. The median rental price rose 0.8 percent year-over-year to $2,923. When taking concessions into account, though the median dropped to $2,817, a 0.5 percent decrease from last year.
Meanwhile, Brooklyn saw the largest year-over-year rental inventory decline in six years, according to the Elliman report. Listing inventory dropped 11.9 percent from 2016, clocking in at 2,258. The median net-effective rent also continued to slide for the sixth consecutive month, falling 2.9 percent year-over-year to $2,760.