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Rising rents and fewer freebies are discouraging New York City renters from making a move to a new apartment if they don’t have to—because they won’t find many deals out there.
They’re staying put because chances of getting a lease with some kind of concession, like a month free or no broker fee, have dropped considerably, according to Douglas Elliman’s October rental market report for Manhattan, Brooklyn, and Queens. Concessions fell in Manhattan for the seventh consecutive month, and Brooklyn saw the largest year-over-year drop in concessions so far this year.
While landlords are feeling new pressure from changes to New York’s rent laws, they currently have the upper hand in this market cycle. Would-be buyers are sitting out their next purchase, choosing to rent instead, increasing demand for apartments and emboldening landlords to keep rents high and offer fewer freebies.
“Soft sales conditions in the city are certainly helping to make the rental market tighter, and a drop in the signing of new leases also suggests that landlords are successfully retaining tenants upon lease renewal,” says Hal Gavzie, executive manager of leasing for Douglas Elliman.
In recent months, Queens bucked trends seen in Manhattan and Brooklyn. In October, however, trends in Queens were more in line with those boroughs. Queens saw an increase in net effective median rent, or rent with concessions factored in, for the first time in four months and a drop in leases with concessions for the third straight month—the biggest decline in six months.
Manhattan rent rose for all apartment sizes, the report said, with the median rent up 0.1 percent to $3,500. New development median rent is rising faster than existing median rent. Leases with concessions represent 36.9 percent of total leases, down from 41 percent.
The vacancy rate in Manhattan was 2.03 percent, up from 1.49 percent, and the number of new leases fell 12.5 percent to 4,236.
In Brooklyn, the median rent was up 2.5 percent to $2,995. The share of new leases with no broker fees or rent concessions was 34.6 percent, down from 43.1 percent. And the number of new leases fell 20 percent, to 1,152.
For Queens, median rent rose 0.5 percent to $2,945 and concessions fell year over year for the third straight month.
Other market reports
Citi Habitats' rental market analysis for October finds that even though rents were up slightly in both Manhattan and Brooklyn year-over-year, the markets appear to be stabilizing. Vacancies have increased for the fourth consecutive month—a sign that apartment seekers may be resisting the current high pricing.
“Given the fears of a potential recession and the continued headwinds faced by the sales market, renting remains the ‘safe bet’ for many. However, renters are price sensitive and they are doing their research. With the holiday season approaching, landlords will likely need to add value— through rent adjustments or increased incentives—to drive traffic to their properties versus the competition,” says Gary Malin, president of Citi Habitats.
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