Photo: Robert Clark
Rental prices in Manhattan remained high in July, but nearly twice as many new leases included landlord incentives compared to last year, according to a report released today by New York brokerage Douglas Elliman. At the same time, the use of incentives shot to a new high in Brooklyn.
The median price of a Manhattan apartment was $3,450 in July, unchanged from last year. There were 6,133 new leases signed last month, up 3.4 percent from July 2016. Meantime, the share of new leases that contained landlord incentives soared to 26.5 percent, up from just under 11 percent last year.
In Brooklyn the increase in the use of incentives was even more pronounced. The net share of new leases that contained concessions skyrocketed from 9.5 percent last year to over 22 percent last month — a record high for the borough.
Landlords will use incentives to attract new tenants and keep units filled. Incentives are usually a period of free rent, although landlords have begun to get more creative by offering Netflix, Hulu, and cable subscriptions as well. The average incentive in July was 1.3 months free rent.
Despite the increased use of incentives, renters may not be getting that much more bargaining power.
“Tenants are gaining more power, but only at the high end market. The use of concessions skew higher at the top of the market because that is where the excess supply exists — the entry level apartment market remains very tight,” Jonathan Miller, CEO of the appraisal firm Miller Samuel, Inc. and author of the Elliman report, tells BuzzBuzzNews.
Manhattan’s median net effective rent, which is the median rent less the rental equivalent of free rent, declined annually for the first time in over five years to $3,350, a year-over-year decrease of nearly 2 percent.
The use of incentives also keeps the vacancy rate low. And given the high percentage of leases with incentives in July, Manhattan’s vacancy rate unsurprisingly declined to 2.08 percent from 2.49 percent last year.
Manhattan renters had nearly 5 percent fewer apartments to choose from in July compared to last year. There were 7,545 available apartments in July, down from 7,681 last year.
Manhattan apartments were discounted 2.3 percent from their original listing price in July, up from 1.8 percent last year.
But with summer now inching closer to fall, renters could see a shift in Manhattan’s market.
“I suspect concession usage will top out as tenants are wary of not qualify for a rental without the concessions. Prices are expected to continue to slip at the high end given the continued influx of new rental units,” Miller tells BuzzBuzzNews.
Click here to read the entire report.