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MANHATTAN RENTAL MARKET
BOOSTED BY INCENTIVES
Rents rise, and vacancy rates fall – while landlords increase use of concessions.
New York, NY (March 12, 2015) – Leading Manhattan real estate brokerage Citi Habitats released its monthly rental market analysis for February 2015 today. The report found that during the month, average rents increased slightly and the vacancy rate fell. However, landlords increased their use of incentives during February – a sign that the market may still have some flexibility for would-be tenants.
When compared to January 2015, average rents in February climbed 1% for one-bedroom homes. For two-bedroom units, prices rose 2%. Rents for studio and three-bedroom apartments also increased, but by a negligible amount.
Looking year-over-year, average rents are a mixed bag, although prices are up overall. From February 2014 to February 2015, rents increased 5% for studio apartments, and 3% for one-bedrooms. In contrast, over the same period, rents fell 2% for two-bedroom units, and 1% for three-bedroom homes.
In February 2015, the borough-wide vacancy fell to 1.45% from January’s rate of 1.60%, and is the lowest Manhattan vacancy rate we have seen since September 2014, when the rate was 1.42%.
The year-over-year vacancy rate also fell. The Manhattan vacancy rate was 1.50% last February (again, compared to 1.45% in February 2015).
When examining incentives, 12% of rental transactions brokered by Citi Habitats offered a free month’s rent and/or payment of the broker fee to entice new tenants in February, up from 10% in January. Last month’s percentage is equal to a year ago (February 2014) – when 12% of new leases also included an owner-paid concession.
“Manhattan’s rental market remains strong. However, a few factors indicate that tenants are still price-sensitive,” commented Gary Malin, President of Citi Habitats. “Some landlords are using move-in incentives to keep their face rents relatively high, while still providing a sense of ‘value’ for tenants. In addition, the fact that the East and West Villages, among Manhattan’s most popular neighborhoods, have the highest vacancy rates means some tenants have simply been priced out of these areas. Landlords have been looking to maximize their assets, and have likely pushed rents near their breaking point. As the weather warms up, and demand intensifies, it will be interesting to see if owners will attempt to push even further. Now is the time to act, for those in search of bargains.”
Additional relevant findings of the Citi Habitats February 2015 monthly rental report are outlined below:
- In February 2015, the average monthly rental price for a Manhattan studio was $2,150. For one-bedroom homes, the average was $2,893. For two-bedrooms, the average rent was $3,957. Finally, the average three-bedroom apartment rented for $5,133.
- By a large margin, the most expensive neighborhood for renters in February 2015 was SoHo/TriBeCa, with a median rent of $6,500. Gramercy/Flatiron was the second priciest area, with a median rent of $3,800.
- The least expensive area for renters in Manhattan during February 2015 was Washington Heights, with a median rent of $1,825. When examining neighborhoods below 96th Street, the Upper East Side’s median rent of $2,450 was the lowest of all areas in this section of the borough.
- With a vacancy rate of 0.74%, Gramercy was the area with least inventory in February 2015, followed by the Upper East Side at 1.04%. On the other end of the spectrum, the vacancy rate was highest in the East Village. Last month, 2.19% of rental units in the neighborhood were vacant. The West Village was the area with second-highest percentage of available homes, with a vacancy rate of 1.98%.
Click the image above to access the full report