Were you hoping to rent a larger apartment in New York City this spring? You probably found yourself among some unexpected competition.
There’s an influx of new renters in New York City as would-be buyers are putting the brakes on purchasing and opting to lease apartments instead. And that increase in demand is releasing some of the pressure on landlords to offer deals like “free” months or no-fee apartments, which has characterized the rental market, especially on the high end, in recent months.
Douglas Elliman Real Estate’s May 2018 rental market report for Manhattan, Brooklyn, and Queens shows a continuation of rising rents in all boroughs.
“One of the biggest issues at play is the softness at the top of the sales market feeding more activity at the top of the rental market,” says Hal Gavzie, executive manager of leasing for Douglas Elliman Real Estate.
The report shows that in May, Manhattan recorded the largest market share of three-bedroom rentals since the statistic was first tracked in September 2011. The number of new leases in the category surged 20 percent year over year.
“As more consumers opt to rent until they feel more comfortable with the sales market, we are seeing more activity in the high-end rentals,” says Jonathan Miller, president and CEO of real estate appraisal firm Miller Samuel and the author of the report. Miller says he sees the shift as “a reaction to the uncertainty in the sales market.”
Potential buyers are pausing their purchases while they determine the impact of the new tax law and higher interest rates.
In Manhattan, the report says, the net effective median rent, which reflects concessions or deals from landlords, rose year over year after five months of declines because of the impact of larger, pricier apartments being scooped up. About 38 percent of May new rentals came with concessions. While this was the lowest percentage in 2018, concessions are still a strong factor in the market: It was the 36th consecutive month with a year-over-year rise in concession market share.
In Brooklyn, the net effective median rent fell slightly year over year, the sixth consecutive month with a drop, and concessions failed to set a new market share record. The share of new rental transactions concessions was 43 percent, up from 15 percent a year ago.
For the northwest region of Queens, the market share of landlord concessions fell after eight consecutive months of increases, when record-breaking amounts of concessions were reached. The area saw both a sharp decline in net effective median rent and median face rent, the report says.
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