As the weather in New York City heats up, so too does the rental market. At least that's traditionally been the case, but Douglas Elliman has just released its May rental market report for Manhattan, Brooklyn, and Queens, and it details a market that is, more or less, stagnant. As rents have traditionally risen at a terrifying clip, this is pretty refreshing news.
In Manhattan, rents neither rose nor dropped significantly in May and this year to date, rents have remained stagnant year-over-year. The median rent in May was $3,400, up negligibly from the median rent in May 2015 of $3,381. Not only have rents remained stagnant, but concessions in May, like, say, a month of free rent, hit a five-year high. When concessions are factored into rents, rents actually decreased almost half a percent from this time last year.
Vacancy rates are also way up, at 2.51 percent. According to Elliman data guru Jonathan Miller, the stagnation goes back to a consistent glut of apartments at the higher end of the market and a lack of new supply in the lower end of the market (where there's actually demand.) "The supply issue isn’t going away soon and serves as an offset to the robust local economy that is stoking demand," Miller says, while noting that sales volume is way, way up in the less-expensive commuter towns surrounding New York City.
Brooklyn was once that escape from rising costs in Manhattan, but those days are long gone. Brooklyn rents saw the most gains in May out of any of the boroughs reported on. Whereas rents have remained stagnant year-over-year in Manhattan, rents in Brooklyn rose for the fifth month in a row year-over-year. The rise can't be attributed to new development, despite the 20.6 percent increase in apartment inventory since this time last year, but to luxury rents which have risen by about four percent since this time last year. Still, Brooklyn's median rent in May trailed Manhattan's by $526 (in April it was $653).
Something similar is happening in northwest Queens, where over half of the apartments rented in May are in new developments that command more rent. The median rental price in Queens in May was $2,727, just $147 less than Brooklyn's median rent. According to Miller, Queens's May stats are "a random thing and not indicative of a trend."
In all, it was a lackluster month for rents. "Year to date it would be fair to characterize the overall market as flat," Miller says. Throughout the city rents continued to rise in the non-luxury sector, but as Miller says, "that can't go up indefinitely either. When wages are nearly flat, rent growth is held back too." The city has reached an affordability threshold that's driving people to seek less expensive homes in nearby locales. Perhaps sooner rather than later the city's next-state-over neighbors will be right in the fray.