Market Report: Renters Forcing Manhattan Apartment Landlords to Offer More Concessions Toward End of Last Year
“Landlords are always going to push it right to the edge to maximize what they can get,” said Jonathan Miller, an appraiser and president of Miller Samuel Inc., who prepared a rental report for broker Douglas Elliman. “Perhaps last fall they went a bit too far.”
Still, rents remained extraordinarily high–the highest, on average, in the country—though 2.2% below a peak set in August 2012, a report by Citi Habitats said. It put the average rent in December at $3,384 a month.
Brokers said with uncertainty still remaining over the economy and job growth, it was too soon to tell whether rents would continue to rise as they usually do during the peak rental season in the spring and summer, when many newly employed college graduates move to New York.
But through the fall, with weakening demand, landlords of large buildings, unwilling to cut asking rents, offered more concessions, broker said. These typically include a month of free rent or owner-paid broker fees or both.
Mr. Miller found that 12.8% of apartments rented in December came with concessions, compared with 4.2% in December, 2012. He attributed the weakness in rentals to a surge in sales of condominiums that freed up rental units, as buyers rushed to make deals because of fears of rising interest rates. He said this pattern wasn’t likely to continue this year, when interest rates may rise further.
“I don’t think you are going to see rents ease for tenants in a significant way,” he said.
Gary Malin, the president of Citi Habitats, said the landlords had been very aggressive and didn’t adjust prices fast enough when the market started to shift “because things had been so good for them for so long.”
Citi Habitats put the vacancy rate at 1.82% in December—the highest since December 2009, during the recent downturn—compared with 1.37% a year ago. Still, Mr. Malin said average prices had been fairly stable over the past year or so and this was likely to continue.
This was good news for Jared Tendler, a counselor who works with professional poker players, who found a large corner two-bedroom apartment with oak floors and views of the Statue of Liberty in Battery Park City for $4,750 a month in December. He is due to move in this week.
Mr. Tendler said he had been following the rental market online for months, and waited until he saw an influx of units coming on the market. “The market was definitely a little softer,” he said. “We didn’t have any problem getting the property we wanted for the price we wanted.”
Mr. Tendler’s broker, Caroline Bass of Citi Habitats, said that some large buildings on the far West Side or the East Side east of Third Avenue were now offering both a month of free rent and brokers fees that hadn’t been available six months ago. She lost a rental deal, she said, when a renter decided to opt for a free month’s rent in a new building on West 42nd Street.
Gilad Schiowitz, an independent broker who specializes in rentals, said that there was significant turnover in rentals in the Financial District. But he said the market was still exceptionally strong because of landlords offering concessions.
The development of new high-rise rentals in Brooklyn and Queens neighborhoods—with several thousand apartments due to come on the market in the next few years—were also putting a brake on Manhattan rental increases, brokers said.
Median rents in Brooklyn were up just under 1% from a year ago, but down from November, according to Douglas Elliman and Miller Samuel Inc.
Other market reports showed strong sales and shrinking inventory in Brooklyn, Queens and Westchester. Mr. Miller found that median prices were up 11.2% in Brooklyn in the fourth quarter compared with the 2012 period, and 7.6% in Westchester.
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