Rent

Manhattan rental market saw substantial drop in new leases in December

Tenants are staying put even as landlords offer more concessions than ever for new leases.

Peter Gorges/Flickr

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Although the number of apartments available to rent in New York City is rising, and will continue to do so this year when thousands of new apartments are going to hit the market, new leases in Manhattan are not keeping pace. In fact, they’ve been on a downward trajectory.

For the second consecutive month, new leases in the borough saw a hefty decline of 38.5 percent to 3,240 in December 2018 compared to the previous year, according to Douglas Elliman’s monthly rental report for Manhattan, Brooklyn, and Queens. 

“It was a big drop,” says Jonathan Miller, president of appraisal firm Miller Samuel and author of the report. A decline in new leases, he adds, typically indicates that renters are choosing to renew their current lease instead of signing a new one somewhere else, even though landlords are increasingly offering new tenants some kind of concession—about half of new leases are now no fee or come with a month or more free.

Prior to November 2018, new leasing activity in Manhattan had been on the rise for four months, Miller says, adding that this decline coincides with the low vacancy rate, which dropped to 1.78 percent. 

Along with the drop in new leases, net effective median rent (the rent you pay after concessions are factored in) in Manhattan had a slight year-over-year decline of 0.3 percent to $3,197. 

In Brooklyn, Miller’s report found the net effective median rent slipped 0.6 percent year-over-year to $2,628, but the borough’s growing number of pricier new development on the market is skewing rents higher. Pricing was also skewed higher by two- and three-bedroom rentals, which increased 1.8 percent year-over-year.  

That "doesn’t look like much, but it’s fairly meaningful" since there was more leasing activity for larger apartments than for studios and one bedrooms, Miller says.

As for Queens, “the Amazon HQ2 announcement has led to speculation that the market will tighten soon if not already. It hasn’t,” says Miller. “I think it’s important to remember that this Amazon announcement is a 10-year window, it’s really not next year or the year after, so it’s going to take a while to play out.”

Net effective median rent in the northwest area of the borough—Long Island City, Sunnyside, Woodside, and Astoria—ticked 9 percent higher to $2,774, Miller’s report found, while listing inventory dropped nearly 25 percent and days on the market fell to 27 from 32.