Price pressure, skewed inventory continue to drive up concessions in Manhattan rentals

Median rents dropped 1.8% year-over-year

Concessions in Manhattan earned yet another superlative last month, rising to the third highest market share recorded in the past seven-and-a-half years.

The share of new leases with concessions hit 44.3 percent in April, up from 28.6 percent at the same time last year, according to Douglas Elliman’s latest market report. The percentage of leases with concessions surpassed last month’s share, which clocked in at 41.7 percent, but fell short of January’s 49.3 percent— the highest level seen since October 2010.

Jonathan Miller, CEO of appraisal firm Miller Samuel and author of the Elliman report, noted that concessions were prevalent throughout the market, not just the high end. For instance, 38.3 percent of newly leased studios and 45.9 percent of one-bedrooms apartments came with concessions. At the entry-level sector of the market, concessions are offered because landlords are being too aggressive in driving up rents, Miller said. On the high-end, climbing inventory is the primary reason landlords are offering concessions to renters.

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“Somewhat different reasons, but the same result,” Miller said. “The concessions are the vehicle to bridge the gap between landlords and tenants.”

Median rents dropped 1.8 percent year-over-year to $3,355, according to the report. Net effective rent (calculated with concessions) also continued its downward trajectory, falling 2.2 percent to $3,326. The vacancy rate also dropped slightly year-over-year to 1.99 percent, down from 2 percent.

Listing inventory declined 13.7 percent to 6,142 in April, and the number of new leases also fell 3.5 percent to 4,909.