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When looking at the most recent data for June, we found a ‘mixed bag’ of market conditions.
· In total, rents crept up in Manhattan and Brooklyn – both month-over-month and year-over-year, which is good news for landlords.
· After falling for six consecutive months, the vacancy rate rose slightly – from 1.27% in May to 1.32% in June. Apartment seekers remain price-sensitive, so this increase in available units may be a reaction to ascending rents.
The use of move-in incentives was back on the upswing in June, after falling in May.
· The percentage of leases that included a move-in incentive climbed to 27% in June 2018, from 19% in May.
· While concession use is down considerably from the winter months – they were found on a full 51% new leases in November 2017 for example – they continue to be a significant marketing tool in both new developments and existing properties alike.
However, quarterly trends illustrate an improved market for landlords in the longer term.
· Manhattan rents remained relatively stable during the second quarter compared to both Q1 2018 and year-over-year. However, rents in Brooklyn were up across all categories when comparing both periods.
· The Manhattan vacancy rate fell to 1.34% during Q2 – from 1.77% in Q1. It’s also lower than Q2 2017’s rate of 1.78%. This means fewer available apartment choices for potential tenants.
“In June, landlords were bullish on the summer season due to a streak of six consecutive months of increased market demand. Students, both international and domestic, as well as would-be buyers playing wait-and-see regarding their home purchase, have been among the key drivers of this rise in traffic. Sensing conditions were in their favor, some owners raised rents – while boosting the incentives offered. However, it’s a delicate balancing act – as apartment seekers remain highly price-sensitive. We suspect this uptick in asking rents caused the vacancy rate to climb – for the first time since November of last year.”