Manhattan’s traditional peak apartment-leasing season wrapped up in August with no rent growth for landlords, a sign that their ability to push up costs may wane further in the coming months.
The median monthly rent in August was $3,399, a dollar less than a year earlier, as property owners worked to lure tenants amid a 40 percent jump in listings, according to a report by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Apartment seekers signed 6,285 new leases, the most in any month since records dating to January 2008, to take advantage of deals.
New York leasing typically jumps from May through August as new college graduates move to take jobs in the city and families settle down before the start of the school year. That demand was still there, but this time it didn’t translate into higher rents as it has in years past, said Jonathan Miller, president of Miller Samuel. Competition from a surge of newly built towers is forcing landlords to grant more tenant breaks to keep their apartments from going empty.
“The price growth is not there because of the new product that’s coming on,” Miller said in an interview. “At least over the next year or two, we’re challenged by excess supply.”
There were 7,478 rentals on the market in Manhattan at the end of August, including condos available for lease. The total was the second-highest for a month since April 2009, according to Miller.
Brokerage Citi Habitats, in its own report, said 19 percent of new Manhattan leases the firm arranged last month came with some form of landlord concession, such as a month’s free rent or payment of the broker’s fee. A year earlier, landlords offered such sweeteners on only 7 percent of new deals.
Increased incentives in August are landlords’ acknowledgment that the peak leasing season was muted and that more aggressive tactics will be required to prevent vacancies in the slowest period, from now through the end of the year and the beginning of 2017, Citi Habitats President Gary Malin said.
“Owners felt that these four months were their primary season – they were in the driver’s seat and they didn’t feel they needed to make adjustments,” he said. “Now, there’s that fall and winter drop-off, and they realize, ‘If I don’t start corrective action, I may be stuck with apartments for longer than I’d like to be stuck with them.’”
This year, 5,675 newly built apartments – most of them high-end – will be added to Manhattan’s rental inventory, data from Citi Habitats show. Brooklyn will get 6,635 new units.
“It will be interesting to see what the next four months hold,” Malin said. “It’s going to be a cat-and-mouse game with owners and tenants: Who’s going to blink first?”
Average rents for apartments in some of Manhattan’s costliest neighborhoods declined in August, according to Citi Habitats. In Soho and Tribeca, one-bedroom units averaged $3,420, or 13 percent less than a year earlier, and three-bedroom rents dropped 17 percent to $7,575. For two-bedroom homes in the area, the average climbed 5 percent to $6,089.
In Brooklyn, where the median year-over-year rent fell for a second consecutive month in August, landlords offered incentives on almost 11 percent of all new leases, compared with 5.2 percent a year earlier, Miller Samuel and Douglas Elliman said. The number of new agreements signed in the borough jumped 36 percent to 1,495, also the most for a month since the data began in January 2008.