Photo: Robert Clark
Rents were up throughout New York City in October, but that didn’t stop landlords from doling out incentives to fill vacant units.
Last month, Manhattan’s vacancy rate fell to its lowest October level in nine years, according to a new report by New York brokerage Douglas Elliman.
“The uncertainty caused by the new federal tax law have helped some would-be buyers into the rental market until they are more comfortable with making a purchase,” CEO of the appraisal firm Miller Samuel and author of the report Jonathan Miller tells Livabl.
Landlords typically provide incentives in the form of a period of free rent, in order to keep units occupied and vacancy rates down. Manhattan’s vacancy rate was 1.49 percent in October, down from 2.47 percent last year.
The net share of all new Manhattan leases that contained incentives rose from 28 percent to 41 percent year-over-year in October — the 41st consecutive month of annual increases.
The average incentive in October was 1.3 months of free rent, mostly unchanged from the previous month and last year. But a growing number of landlords are luring new tenants with more modern incentives like Netflix subscriptions or Amazon gift cards.
The median rent in Manhattan rose 2.8 percent year-over-year to $3,495 in October. At the same time, rent for new construction units slipped 2.6 percent to $4,565.
The number of new leases rose 5.7 percent year-over-year in October as listing inventory dropped nearly 29 percent from last year. The average days on market was 29, down from 44 days last year.
And, with more demand for fewer units, landlords slashed the listing discount from 3.2 percent to 2.1 percent.
Across the river, the Brooklyn market mirrored Manhattan’s in many respects. The share of new leases containing incentives rose annually for the 33rd consecutive month. Over half of all new leases contained incentives in October, the second highest market share in more than eight years.
Brooklyn rents were on the rise in October, following several years of heightened new construction activity which is skewing all prices trends upwards. The median Brooklyn rent jumped 4.4 percent year-over-year to $2,923 in October, with new construction rents rising faster than existing rentals — also skewing overall prices higher borough-wide.
In Queens, new construction rents accounted for almost 43 percent of all activity in October. Median rents remained stable for the month, but high-end new construction units coming to the market continued to skew overall prices.
The number of new leases rose almost 36 percent year-over-year in October, marking the fourth consecutive month with large year-over-year gains in new leases.
From last year, the market share of new leases with incentives rose from 48.3 percent to 58.2 percent. Overall listing inventory was down over 21 percent compared to last year at the same time.
“New construction represents about 25 percent of rental activity in Brooklyn and about 43 percent in the northwestern region of Queens. And since it is generally higher priced than existing rentals, it is partially responsible for rising face rents,” says Miller.