Photo: Robert Clark
While Manhattan’s rental market saw a surge in the number of new leases in May, fewer landlords were doling out incentives as rental price growth cooled.
The net share of new leases that contained incentives fell to the lowest level recorded in 2018 so far, according to a newly released report by New York brokerage Douglas Elliman.
“As the NYC sales market slows from 2017 levels, would-be buyers who are uncertain about the near term, are looking to the rental market. In Manhattan, the market share of three-bedroom rentals is the highest we’ve ever tracked — since September 2011 — and three-bedroom (or more) leases jumped 20 percent in May,” Jonathan Miller, CEO of the appraisal firm Miller Samuel, and the author of the report, tells BuzzBuzzNews.
The number of new Manhattan leases signed rose nearly 28 percent in May. However, May’s reading was only up 5.2 percent compared to last year at the same time.
The net share of new leases that contained incentives was up 12.5 percentage points from last year to 37.6 percent, the lowest share of the year. May marked the 36th consecutive month of an annual increase in incentive market share.
Incentives are typically a period of free rent used by landlords to keep units occupied, which in turn keeps the vacancy rate down. Increasing numbers of landlords are even luring new tenants with more high-tech incentives like Netflix subscriptions.
May’s incentive was an average of 1.3 months of free rent, unchanged from April.
Manhattan’s vacancy rate edged up for the first time in six months in May, rising to 1.85 percent from 1.72 percent recorded the previous month.
The number of listings fell 18 percent from last year in May. At the same time, the average days on market was down to 29 from 44.
The average Manhattan rent rose just 0.5 percent year-over-year to $4,230.
“The Manhattan (and Brooklyn) rental market is cooling and seeing skewed overall price trends due to the great activity of larger apartments,” Miller says.
The Downtown Manhattan submarket was the priciest and most popular in May, with a median rental price of $3,850 and accounting for nearly 44 percent of all leases for the month.
Meantime, Brooklyn landlord incentives failed to set a new market share record for the sixth month in a row in May, but were still more than twice than what they were last year at this time.
Some 42.8 percent of all new Brooklyn leases contained incentives in May, falling from 51 percent recorded the previous month. May’s reading was up dramatically from the 15.2 percent net share recorded in May 2017.
The average incentive was 1.5 months free rent in May, unchanged from last year.
Brooklyn rents averaged $3,156 in May, up a modest 0.6 percent year-over-year.
Similarly, in Queens, the net share of leases with landlord incentives fell to 47.7 percent in May, down from April’s reading of 65.1 percent. However, May’s reading was still up from the 37.9 percent recorded last year at the same time.
The market share of landlord incentives fell after eight consecutive months of a top three record being reached.
The average rental price in Queens averaged $2,794 in May, a decrease of 6.5 percent year-over-year.
Click here to read the entire report.