Photo: Robert Clark
Temperatures may have been on the rise in July but Manhattan’s rental market was quite cool as rents dipped despite there being significantly fewer listings on the market.
And with inventory continuing to tighten, Manhattan apartments were on the market for substantially less time than just a year ago, according to a report released today by New York brokerage Douglas Elliman.
Over the last year, the average rent of a Manhattan apartment fell 2.4 percent to $4,011 in July, with the average price per square foot decreasing 0.5 percent to $65.97.
Average prices fell across all unit sizes in July.
There were 6,145 new leases in July, up 0.2 percent from last year at the same time. July’s reading was up 12.8 percent from the previous month.
The share of new leases that contained landlord incentives rose to 35 percent from 26.5 percent recorded in July 2017.
Landlord incentives are typically a period of free rent used by landlords to keep units occupied, which in turn keeps the vacancy rate down. Manhattan’s vacancy rate was 1.6 percent in July, down from 2 percent last year but unchanged from the previous month.
Increasing numbers of landlords are even luring new tenants with more high-tech incentives like Netflix subscriptions.
July’s incentive was an average of 1.3 months of free rent, unchanged from June.
Net effective median rent — face rent minus incentives — fell year-over-year for the seventh time in the last eight months.
Manhattan’s rental inventory shrank by 19.9 percent from last year in July. Units spent an average of 27 days on the market, down from 43 days last year.
With less inventory, the market has been extremely competitive.
“The top continues to be the most competitive with excess supply and then tighter as you move to lower price levels. We are now starting to see the starter market ease from being white hot to brisk,” Jonathan Miller, CEO of the appraisal firm Miller Samuel and author of the report, tells Livabl.
The luxury submarket — which includes the top 10 percent of apartments by price — continued to soften in July, with all luxury price trend indicators declining from year-ago levels in July.
In July, the average price of a Manhattan luxury rental declined 3.9 percent from last year to $9,594 as the average price per square foot slipped 2.6 percent annually to $74.89.
At the neighborhood level, average prices remained mostly unchanged from last year in July except in the East Side and Northern Manhattan, where average prices decreased by 3 percent and 2 percent, respectively.
Meantime, the average Brooklyn rent rose 5.3 percent annually to $3,306 in July.
Prices rose across all apartment sizes as “more new construction units entered market in July, skewing prices upward,” writes Miller in the report.
And despite a 3.1 percent annual rise in net effective rent, the market share of landlord concessions doubled to 41.4 percent in July.
“Landlords are feeling the pressure of keep vacancy low and face rents from falling,” Miller says.
Listing inventory in the borough shrank 19.9 percent from last year in July but the number of new leases was up 11.2 percent year-over-year.
Brooklyn apartments were on the market an average of 27 days in July, compared to 43 days last year at the same time.
With the summer season coming to a close, Miller speculated on the coming fall months ahead.
“Unless there is an unforeseen economic event in the making, renters should expect more of the same,” Miller explains.