It has been a while since it was this hard for landlords to fill an apartment in New York City.
Manhattan’s vacancy rate hit a new high in the 14-year history of a monthly rental report as new leasing activity in the borough was down 62 percent last month from a year ago. It was also 54 percent lower in Brooklyn and 61 percent lower in Queens.
Though large, the year-over-year declines were not as bad as in April, which Jonathan Miller, author of the Douglas Elliman report, attributes to parties beginning to adjust to the new normal of the pandemic.
“I think we’re moving from the stunned-and-paralyzed mode to the thinking-about-the-future mode,” he said.
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More Manhattan apartments were left unrented last month than in any month since Miller began tracking the market in August 2006. The vacancy rate of 2.88 percent was up from 1.65 percent during the same period in 2019. It was 2.42 percent in April.
Miller, an appraiser, said, “As people lose their jobs or move out of the city to suburbs, it’s harder to fill that apartment,” he said.
Despite rising vacancy, rents stayed flat in Manhattan. The median rental price in Manhattan was $3,415 in May, virtually unchanged from $3,413 a year earlier. In Brooklyn, rents last month were 3.3 percent higher than a year ago — $2,921, up from $2,829.
But landlords threw in more sweeteners last month in Manhattan. In 42 percent of Manhattan deals, owners made rental concessions or footed the bill on broker fees, up from 34 percent a year ago. The value of concessions was equivalent to 1.5 months of free rent, up from 1.2 in 2019.
In Brooklyn, the share of discounted deals rose to 33 percent up 40 basis points from 32.6 percent in May 2019. The size of concession grew to 1.4 months of free rent from 1.3. Though gains were small for renters, it was the first time in 17 months that the number of Brooklyn landlords offering incentives increased.
Queens bucked the trend with median rental prices dropping 5.6 percent to $2,745 from $2,908 a year ago, though the number of landlords that offered incentives ballooned to 65 percent from 33 percent. The value of the concession offered rose to the equivalent 1.8 months of free rent from 1.6 months.
Miller said it was “too soon” to see large drops in rent but noted that May rents were lower than in April in all three boroughs, indicating “a step back.” With new leasing volume down, most price cuts or rent deferments in May occurred as part of renewals or in negotiations between landlords and tenants, he explained. (Renewal data is not tracked in Miller’s report.)
“The action, so to speak, is happening on the private side,” said Miller, noting a sense in the market of landlords and tenants “being stuck in the same boat, or stuck in the same apartment.” He attributed the fall in leasing activity partly to agents being unable to show apartments and partly to the sudden onset of the pandemic.
“We’re largely in a holding pattern, but that’s coming to an end pretty quickly,” said Miller.
Agents will be able to begin showing apartments in New York City as part of phase two of reopening. The earliest that could be is June 22, though Mayor Bill de Blasio has said he doesn’t anticipate it until July.
Write to Erin Hudson at ekh@therealdeal.com