Photo: Robert Clark
A bump in the number of new construction leases signed last month helped edge Manhattan’s rental prices upwards, according to a newly released report by New York brokerage Douglas Elliman. However, this bump is not likely to become a trend.
The average price of a Manhattan apartment jumped 4.4 percent year-over-year to $4,208 in May, while the median price was up 2.2 percent to $3,475 from last year.
The number of new leases signed soared just over 17 percent in May. This increase was likely due to the large number of new construction apartments that became available last month. New construction leases doubled year-over-year in May, according to Elliman data.
But while new construction had a direct impact on prices in May, it seems to be a fluke.
“This is a random event. It depends on when construction is complete. It’s too early to call it a trend, but more likely to be a random event,” Jonathan Miller, CEO of appraisal firm Miller Samuel and author of the Elliman report, told BuzzBuzzNews.
Despite an increase in number of new construction apartments becoming available last month, the number of new leases that included incentives remained high.
The number of leases that included landlord incentives doubled from last year to just over 25.1 percent in May. While still high, May’s percentage remains below January’s record high of 41 percent.
Manhattan renters should expect landlords to continue offering incentives for the foreseeable future.
“At this point, with new product still entering the market, they will continue indefinitely. However since the vacancy rate has been held in check, I don’t think we should expect the use of concessions to expand in the near term,” Miller told BuzzBuzzNews.
Landlords will often use incentives to attract renters and keep units occupied. The use of incentives also helps to keep the overall vacancy rate low.
Manhattan’s vacancy rate fell to 1.72 percent in May — the first time in two year it was below 2 percent. Miller says that is evidence that incentives are working.
Listing inventory was up 5.2 percent from last year in May, the bump coming from new construction apartments.
The average days on market was 44 last month, up one day from May 2016.
And the average listing discount, or the reduction in price from listing to signing, decreased from 2.1 percent last year to 1.9 percent in May.
Manhattan has been struggling with affordability in recent months, which has contributed to the rising use of incentives by landlords and rising prices. That is not likely to change during the summer.
“There is at least two years of new product entering the market, but skewed to the high end,” Miller told BuzzBuzzNews.
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