Photo: Rob Young/Flickr
Although the number of leases in Manhattan with landlord incentives dipped in February from the previous month’s record high, last month’s percentage remained at a near record level. Landlords’ use of incentives have helped stabilize rents by keeping the borough’s vacancy rate in check, says a newly published monthly market report by the New York City brokerage Douglas Elliman.
Landlords are likely to offer incentives depending on market conditions to attract renters and keep units occupied. A period of free rent is one of the most common incentives. In January, the number of new leases that included landlord incentives hit a record high of nearly 41 percent. That percentage slipped to 26.4 percent last month — the second highest on record.
And while the percentage of leases with incentives dropped, listing inventory increased almost 12 percent year-over-year in February — the 17th consecutive month of year-over-year inventory increases. The expanded inventory unsurprisingly led to a slight increase in the borough’s vacancy rate for the month, inching up to 2.44 percent from the 2.31 percent recorded last year.
“While landlords are still offering move-in incentives on a substantial number of apartments, they may have been emboldened by the declining vacancy rate from December to January. As a result, they pulled back their use of concessions slightly last month,” said President of Citi Habitats Gary Malin in a recent report.
In looking at the uptick in February’s vacancy rate, Malin said savvy shoppers didn’t see enough “good values” on the market.
“There is simply a lot of inventory available. Tenants can pick and choose from a variety of enticing options – on both sides of the East River,” he added.
Meanwhile, the number of new leases declined nearly 28 percent from last year in February, which also contributed to the uptick in Manhattan’s vacancy rate last month.
The listing discount, or reduction in price from listing to lease signing, rose to 3.3 percent from the 2.5 percent recorded last year.
Median rent declined year-over-year in all size categories in February, with the median Manhattan rent slipping to $3,350 last month. The median rent with landlord incentives declined to $3,260 — the seventh consecutive month of declines. Meanwhile the average length of the landlord incentive remained unchanged at 1.2 months of free rent.
The luxury sub-market, or properties valued at $4 million and up, continued to show signs of “softening,” according to the report. The number of new leases in the sub-market dropped 29.3 percent from last year in February.
Also, following three months of consecutive declines, median rent for new developments increased 13.2 percent to $4,963 from the previous month.
Apartments were on the market an average of 57 days, one day longer than last year.
Click here to read the entire report.