As leasing activity resumed in the city and inventories swelled, the vacancy rate in Manhattan’s rental market hit an all-time high in July of 4.33 percent.
It was the third straight month of record vacancy, according to Douglas Elliman and Miller Samuel’s monthly rental report, which has been tracking the market for 14 years.
“With the lifting of some of the ‘shelter-in-place’ restrictions, new leasing activity surged month-over-month but still fell well short of year-ago levels,” the report said.
The number of new leases signed in Manhattan increased by 56 percent from June, but was down 23 percent from last year.
“Forty percent of Manhattanites left the city in March and April, and without clarity on topics like school reopenings, there has not been urgency to return,” said Jonathan Miller, author of the report.
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About 420,000 New Yorkers left town after the pandemic hit in March, prompting speculation that the vacancy rate would exceed 5 percent, triggering an end to rent regulation. But the next housing survey on which that threshold must be met is in 2022.
As demand stayed low in July and the number of available units grew, the median rent fell to $3,167, down 7 percent from a year earlier — the largest dip in nearly nine years.
Luxury and upper-tier rentals retained their value better than mid- and entry-tier units, compared to 2019 levels. The former groups, defined as the top 40 percent of the market by price, fell 4.8 percent to $7,995 and 3 percent to $4,559, respectively.
Mid-tier rents fell by 7.4 percent to $3,150, and entry-level rents fell 5 percent to $2,295, year-over-year.
In Brooklyn, new leases increased by a quarter from last month, but were down the same amount year-over-year. The median rent was $3,000, as it was a year ago.
“If you put Manhattan and Brooklyn side by side, the outbound migration narrative is more about Manhattan,” Miller said. “Brooklyn rents are nominally down, activity is down, but it’s not the same scale as Manhattan.”
The median rent for luxury properties in Brooklyn, making up the top 10 percent of the market by price, was up slightly from last year, while in Queens it cratered, falling almost 13 percent.
The median rent in Queens was $2,424 in July, nearly 15 percent lower than it was at the same time last year.
The discrepancy in stability of prices between Brooklyn and Queens was similar for new developments. It increased slightly in Brooklyn to $3,479 but fell dramatically in Queens to $2,950, a decline of 12 percent from just a month ago and 9 percent from July of last year.
Landlords were increasingly willing to sweeten the deal for renters, especially in Manhattan, where nearly half of all new leases involved concessions, compared with about 30 percent a year ago. The size of concessions in Manhattan increased to 1.7 months’ rent from 1.1 last year.
Concessions in Brooklyn were stable at 1.4 months from a year ago, while up slightly in Queens from 1.2 last year to 1.4 this year.
Contact Orion Jones at orion.jones@therealdeal.com