This week I thought I'd dig out some of the residual stuff from last week's rental report to explore the vacancy hyperbole. As far as I know, firms that present the vacancy rate (including mine) use a sampling of buildings from different neighborhoods/regions of Manhattan where building rental status is continually updated. The bottom lineand a reality checkis that the vacancy rate has always been low. It's remained below 5 percent since at least World War II. (At least that's what I've read; I only started writing for Curbed circa 2004.)
So I think the rise and fall of vacancy gets a bit (all right, wildly) overhyped in context. Does it really say anything about how the rental market is worsening when the vacancy rate falls from 1.78 percent to 1.65 percent? I don't think so. It's more about observing a package of metrics that together tell a similar story about the marketand those metrics help inform renters when the market is easier. At least relatively easier.
I've long looked at landlord concessions as something more tangible than the vacancy rate that is a sign of the same market condition. By landlord concessions, I am referring to the market share of rental transactions that had some sort of landlord giveback, translated into the equivalent monthly rent.
In the chart below, it is apparent that concessions (and vacancies) fluctuate according to the season, and that those two metrics are perhaps most in line over the past two years. Use of concessions falls throughout the spring and summer as the market heats up. As rents remain at or near-record levels, both vacancy and use of concessions will remain low on a seasonal basis. Starting in late summer or fall, you'll see both vacancy rates and landlord concessions begin to rise again. That means, for all you renters out there, that it's a better time to move.