Citi Habitats recently released a rental market report that tracked conditions in the Manhattan and Brooklyn markets during December as well as throughout the fourth quarter of 2017.
Our research found that apartment seekers in these boroughs experienced high pricing, but also a lot of available inventory and move-in incentives.
Due to a recent influx of new apartments especially at the luxury end of the market tenants had a lot of product from which to choose. Many of these apartments are concentrated in fast-growing neighborhoods, such as Long Island City, Queens and downtown Brooklyn.
If you are in the market for a new rental apartment, be open-minded when it comes to target areas. New York City is full of thriving, diverse communities, and it pays to get out there and explore.
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Home seekers have become more flexible in terms of the neighborhoods they will consider due in part to the rise of alternative means of transportation. Car and bike-sharing services, as well as the expanded East River ferry routes, have opened up huge swaths of the city that were once inconvenient from a transit perspective.
Over the last few months, rental pricing in both Manhattan and Brooklyn has hovered near record highs. However, rents have recently declined slightly, a sign that tenants have reached the absolute limit in terms of what they are willing or able to pay.
In December, the average Manhattan one-bedroom apartment rented for $3,238 per month versus $2,704 in Brooklyn.
These rents are respectively 1% and 2% lower than the month prior. It will be interesting to see if overall rents continue to trend downward as 2018 progresses.
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Meanwhile, the vacancy rate remains above 2%. While still a tight marketplace, especially when compared to other parts of the country, vacancy rates above 2% are rare in our city due to the high demand for housing here. New York City offers a lifestyle and opportunities available nowhere else on Earth, and our rental market reflects that.
Hesitant to lower prices, many landlords have instead leaned on concessions to create a sense of value in the marketplace.
Typically, these incentives take the form of free rent to the new tenant or payment of the broker’s fee sometimes both. However, some landlords get more creative with their offers. We have seen building owners waive gym/amenities fees, cover moving expenses or give gift cards to new residents.
Landlord concessions were found on 41% of leases during December 2017, down from 51% in November. While the use of move-in incentives has fallen recently, they are still much more common than they have been in recent years. Besides November, the last time their use topped 40% was back in April 2010.
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The relatively high vacancy rate and continued reliance on concessions by building owners does reflect the ongoing disconnect between what home seekers are able to afford and the rents that landlords want to achieve.
The good news for tenants is that in some cases, owners may be willing to start lowering asking rents, at least slightly. It doesn’t take much. Demand for new housing in our city is intense, the only thing tempering it is price. Even small reductions in rent can cause a spike in demand.
If you don’t mind braving the often-freezing temperatures, the winter months are an excellent time to be in the market for a new home. Be sure to comparison-shop among both buildings and neighborhoods. There are some great deals out there if you are willing to look. Tenants today have a lot more options, and that’s a good thing.
Gary Malin is president of New York real estate brokerage firm Citi Habitats.
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