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From May to June, rents in Manhattan and Brooklyn remained stagnant.
- Pricing in Manhattan declined an average of 1% for studio and two-bedroom units when compared to the month prior. Rents for one-bedroom homes rose, while they decreased for three-bedrooms – but by insignificant amounts for both categories.
- In Brooklyn, average rents fell 2% for studio apartments. Pricing declined for one-bedrooms, while it increased for three-bedroom homes. However, the changes were negligible for both apartment sizes. Rents for two-bedroom units remained unchanged from May.
Meanwhile, the vacancy rate ticked upwards.
- In June, 1.74% of Manhattan apartments were vacant, compared to 1.58% in May. Vacancy rates were highest in the East and West Villages, where small homes often carry high price tags. In contrast, inventory was tightest in Murray Hill and the Upper East Side, both areas with a reputation for offering ‘good value’ for tenants.
Are incentives the market’s ‘new normal?’
- In June, 28% of new leases signed with Citi Habitats included some form of concession, up from 22% in May. With increased options for apartment shoppers, many landlords continue to rely on concessions to keep rents at the levels they desire. The percentage of leases that include a move-in incentive has topped 20% since September of 2016, and has been higher than 10% from October 2015 onwards.
While the market has recently slowed, the quarterly data shows strength when compared to Q1.
- During the second quarter of 2017, Manhattan rents increased overall when compared to the quarter that preceded it. Meanwhile, the borough’s vacancy rate decreased to 1.78% from 1.93% in Q1. The percentage of concessions also fell quarter-over-quarter. During the most recent quarter, 26% of leases included one, compared to 34% in Q1.
“Our research found that rental market conditions shifted further to the tenants’ favor during June, bucking the historic trend of a market that tightens as summer progresses. Average rents remained flat or declined slightly across the board month-over-month, while the vacancy rate climbed. Landlords’ use of incentives also increased. This extends the string of double-digit concession percentages to 20 consecutive months.” – Gary Malin, President of Citi Habitats.
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