New York's sweet apartment deals are no longer wooing renters
It's a renter's market in New York, and after a year of being bombarded with landlord offers of gift cards and free months, apartment seekers are getting bored with all the perks.
In Manhattan, the number of newly signed leases last month dropped 11% from a year earlier, sending the apartment-vacancy rate to its highest level this year, according to a report released Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. In Brooklyn, renters signed 4.1% fewer leases, only the second time in 2017 that the year-over-year tally dropped.
Renters "are not wowed by landlord concessions right now — they're expecting it," Hal Gavzie, who oversees leasing for Douglas Elliman, said in an interview. "It may not be enough. You may have to price it more aggressively to move."
Landlords trying to keep their units from going empty have largely tried to avoid cutting their price, preferring instead to woo renters with upfront perks such as payment of brokers' fees, gym memberships or a free month or two added to the lease term. While that strategy has worked for much of this year — drawing record numbers of tenants enticed by the deals — its effectiveness is waning as ever more new units from a construction boom pile onto the market.
For all of 2017, about 15,000 newly built market-rate apartments will have been listed for rent in Manhattan and Brooklyn, according to brokerage Citi Habitats. Another 15,000 will become available next year.
"Price-sensitive tenants are comparison shopping like never before," Gary Malin, president of Citi Habitats, said in a report released Thursday.
Manhattan landlords offered concessions on 27% of all new leases signed in September, almost double the share from a year earlier, Miller Samuel and Douglas Elliman said. That's helped keep rents relatively steady, with the monthly median falling only 0.4% to $3,334 after incentives are subtracted.
In Brooklyn, 20% of new leases came with concessions. But there, the deals weren't enough to contain a slide in rents. The median last month dropped 5.6%, the most since March 2015, to $2,757.
There were 2,467 apartments listed for rent in Brooklyn at the end of September, which is 37% more than the monthly average for the last five years, Miller Samuel and Douglas Elliman said. Manhattan's inventory of 7,363 units was 21% higher than the five-year monthly average. The vacancy rate in the borough climbed last month to 2.63% from 2.38% a year earlier.
The added supply eased the search for Garrett Barnard, who returned to New York last month after almost a year in San Francisco. The 27-year-old web designer set a rent budget of $4,500 for a two-bedroom apartment in the vicinity of Greenwich Village, to share with a roommate who's attending New York University.
Working with Douglas Elliman broker Yuliya Sysevich, the two looked at about 15 apartments over two days, and settled on a first-floor unit in an East Village co-op — because it came with a price cut.
"That was kind of the deciding factor," Sysevich said.
The apartment, first listed in July for $4,600, had its price dropped by $100 just weeks later, according to property website StreetEasy. The landlord also offered a free month of rent and agreed to let the tenants amortize that bonus over the 12-month lease term, making for a monthly cost of $4,125, said Barnard, founder of the marketing firm Mandarin Partners.
In the East Village, rents on leases signed in September fell 7.2% from a year earlier to $3,200, according to Citi Habitats. The brokerage reported declines in several other areas, including Manhattan's costliest, Soho and Tribeca, where the median slipped 2% to $5,195.
Rents rose in neighborhoods such as Chelsea, where the median climbed 1.2% to $4,250, Citi Habitats said. On the Upper West Side, the median jumped 9.8% to $3,295.