The Market

As renters return to Manhattan, landlords pull back on the freebies

By Brick Underground  | July 8, 2021 - 12:30PM 

The share of new Manhattan leases with some sort of concession fell to 37.7 percent—the lowest level since last August.

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As renters continue to return to Manhattan in record numbers and scoop up available apartments—the deals are getting stingier. That's because higher demand has landlords feeling less pressure to offer the same level of concessions, like owner-paid broker fees or multiple free months that they dangled in front of renters as recently as a few months ago.

Brokers tell Brick that very in-demand rental apartments are even seeing bidding wars. In some (highly competitive) scenarios, landlords who get multiple applications are raising the rent or clawing back the concessions. As a result, the renter who gets the apartment is the one who can offer highest rent and pay the broker fee, Devin Someck, co-founder and principal of Living New York, recently told Brick. He’s even seen some rentals go for 10 to 15 percent over asking.

For renters, “frustration is at an all-time high,” Someck says.

No wonder, considering last month was the highest number of lease signings since tracking by the Elliman Report began in June 2008, with 9,642 new leases signed—a slight increase from May and more than triple the amount in June 2020 at the height of the pandemic.

Those new leases are chipping away at the number of available apartments—and reducing the level of freebies offered. Manhattan listing inventory has fallen by half since January, according to Jonathan Miller, president and CEO of appraisal firm Miller Samuel and author of the report. The share of new leases with some sort of concession fell to 37.7 percent—the lowest level since last August.

While rents are still lower than they were a year ago—as of May, they have been rising a little each month. In June, the median rent for Manhattan was $3,195, a 7 percent increase over the previous month and down 9.9 percent from a year ago.

In addition, the average lease period has been on the rise each month since January as renters look to lock in their rate against the future increases with longer leases as the market comes back to life.

The Brooklyn rental market was similarly busy, with the second-highest number of new leases signed and highest June total on record since 2008.

Rents are on their way back up, but have not reached where they were a year ago: The median rent for June, $2,704, was down 1.7 percent from a month ago and down 11.3 percent from a year ago.

That’s a sign pressure is easing off landlords to fill apartments as they pull back on the freebies. The percentage of new leases that came with some sort of concession was 34.1 percent. A year ago, that share was 40.1 percent.

In Queens, the highest numbers of new leases were signed for the month of June and third-highest month overall. The number of listings has fallen by half since January—although still remains high. The median rent for June, $2,700, was up 9.5 percent from May and flat compared to June 2020.

 

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