Manhattan Chelsea pier

Photo: Robert Clark

Since January, the use of incentives by landlords in Manhattan has been on the rise, hitting record and near record levels year-over-year. Last month, the share of new Manhattan leases that included incentives more than doubled from April 2016, while the borough’s vacancy rate reached a two year low, according to newly released data from New York brokerage Douglas Elliman.

The share of new leases with landlord incentives soared to 28.6 percent in April, more than double the 13 percent recorded the same time last year — now the second highest level on record. April’s percentage was also up slightly from the 28.4 percent recorded the previous month, which had previously been the second highest level on record.

In January of this year the percentage of new leases with concessions had skyrocketed to a high of 41 percent. Since January, the percentage of new leases that contain incentives has risen, with each consecutive month edging out the previous month’s total share — though still far off from topping January’s record.

The use of incentives by landlords is a practice meant to fill empty units, and keep the overall vacancy rate down. The most common incentive is a period of free rent. April’s average incentive was 1.3 months of free rent.

As the use of incentives went up, Manhattan’s vacancy rate slipped from 2.35 percent last year to 2 percent in April — the lowest recorded in nearly two years, says Elliman.

Meanwhile, the median net effective rent decreased almost 2 percent year-over-year in April — tied for the largest annual decrease since March 2016. Net effective rent is the adjusted amount of rent to reflect the concession over the length of the lease.

The number of new leases rose almost 5 percent to 5,086 from last year in April, up almost 7 percent from the previous month. The average price per square foot decreased 1.5 percent from last year.

Manhattan’s listing inventory was up 6 percent from last year, with 7,118 apartments on the market in April, says Elliman. Units were on the market an average of 51 days, up from 46 days last year.

The average price of a Manhattan apartment decreased 1.1 percent year-over-year to $4,045 last month, while the median price remained mostly unchanged from last year.

Click here to read the entire report.

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