New York City’s rental market is notoriously competitive. However, recent media coverage reports that the market has weakened for landlords, thus creating a more tenant-friendly environment
But what does this mean for the average apartment seeker here in our city? Have rents come down? Do tenants have a wide array of vacant apartments from which to choose? Should building owners be worried?
While the situation is not doom-and-gloom for landlords, there is increased opportunity for tenants to score a deal. Citi Habitats’ recent July rental report reveals that rents fell slightly for all apartment sizes — except for three-bedroom homes.
In addition, Manhattan’s vacancy rate climbed slightly, to 1.84% — from June’s rate of 1.74%. While still a low vacancy rate in comparison to most cities around the country, it’s high for the borough — where the percentage of available apartments often dips below 1%.
A big change is that landlords are offering move-in incentives in larger numbers than in years past, even during summer, traditionally the busiest season for rentals.
Typically, these concessions take the form of one month (or more) of free rent as well as payment of any brokerage fees for the new resident. While this percentage usually falls to the single digits during the season, in July we found that a full 24% of rental transactions brokered by Citi Habitats included a tenant incentive.
One of the reasons landlords are willing to offer these deals is because the recent influx of new rental inventory. Our research found that nearly 15,300 new market-rate apartments will come online by the end of 2017, with an additional 15,000 new units set to launch next year.
While new residential development is happening across the five boroughs, there are key areas that are hubs for new construction. Because there are a lot of options for prospective renters in these neighborhoods, landlord incentives may be especially prevalent — and generous.
Long Island City in Queens, Downtown Brooklyn and the Midtown West/Hudson Yards area have seen explosive growth and cranes still dot the skyline in these communities. While these new apartments are often priced at the higher end of the spectrum, they may offer some great discounts to new applicants to stand out from the competition.
It’s important to keep in mind that while rents have declined for two consecutive months, they remain near record highs.
To illustrate how rents have climbed over the long term, consider this example. In July, the average Manhattan one-bedroom apartment rented for $3,163 per month. Five years ago, in July 2012, the average was $2,812 — meaning rents for this type of apartment have risen about 12.5% over the period.
With these mixed signals — and what are the key take-aways that apartment seekers should keep in mind? My best advice is to understand that every building owner’s situation is unique. Landlords whose portfolio is located in a sought-after area with few vacancies may not offer an incentive at all.
In contrast, owners who are sitting on a large number of empty units in a saturated sub-market may offer considerable freebies — and be more negotiable with rents and lease terms. If they won’t budge on price, they may be more flexible with your move-in date, or waive amenity fees. When dealing with the landlord or their representative, remember, it never hurts to ask.
New York has a magnetic pull that attracts people from all over the world — who are drawn here by the opportunities and lifestyle our city offers its residents.
However, if apartment seekers are willing to be flexible and comparison shop between buildings and neighborhoods, they may find their dream home — and with terms that might be a pleasant surprise.
Gary Malin is president of New York real estate brokerage firm Citi Habitats.
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