NYC rents dip as concessions become the new normal

A little relief is coming this way for renters, particularly those in NYC’s luxury market. The average rent throughout Manhattan and Brooklyn dipped in January, with concessions like free rent and comped building amenity fees reaching new highs. The use of concessions has been on the rise, particularly in Manhattan, where Douglas Elliman found that it hit an all-time high for the fourth consecutive month—now, more than 30 percent of leases include a concession. In short, it’s a good time to sniff out reduced rent.

In Manhattan, the median rent—including the cost of concessions—has been on the decline for six consecutive months, year over year, landing it at $3,259 for the month of January. (Without concessions, the median rent in Manhattan comes in at $3,369.)

The rental market in the borough has been tracing the same pattern for months: the demand for less pricey and often smaller apartments remains strong while the market for more expensive and larger apartments is less aggressive. Because of this, the average rent for studios and one-bedrooms is rising as rents for two- and three-bedrooms fall. The average rent for a Manhattan two-bedroom is down three percent from this time last year, now clocking in at $4,382. For three-bedrooms, those numbers are far more staggering: the average rent for an apartment with three or more bedrooms has fallen nearly 12 percent from this time last year to $7,706.

Elliman data guy Jonathan Miller explains the trend: “Those renters are also considering moves to the suburbs which are still experiencing record sales volume. Studio renters aren’t going to the `burbs to buy a house—typically.” It’s no wonder the two-bedroom market in Manhattan is where concessions are being used the most.

Similar trends are rippling through Brooklyn, where landlord concessions set a new record in January, more than tripling from this time last year. The median rent in the borough has dipped about two percent from January of 2016, to $2,750. The median rent for a Brooklyn apartment including concessions now sits at $2,702, nearly three percent lower than this time last year. Median rents throughout the borough have been trending downward, with January marking the sixth time in seven months that median rents have declined.

Like in Manhattan, the demand for two- and three-bedroom apartments in Brooklyn remained softer than studios and one-bedrooms, with rents falling nearly four percent from this time last year for two-bedrooms, and almost eight percent for three-plus-bedrooms. On the flip side, the median rent for studios has remained relatively stagnant from this time last year, clocking in at $2,300—way down from December’s $2,409. The median rent for one-bedrooms has increased about four percent since last January, bringing it to $2,700.

But Queens is where renters are likely to have the best luck scoring concessions. According to Miller, 38.5 percent of Queens rentals are now being offered with some kind of concession. Similar to its neighboring boroughs, the median rent in the Queens neighborhoods tracked by Elliman—Long Island City and Sunnyside included—has dipped year over year by about four percent, bringing it to $2,700 in January.

But that doesn’t mean rents throughout the borough are going down. Throughout the neighborhoods in Queens charted by Elliman, rents are majorly up from this time last year for all unit mixes, with the exception of one-bedrooms, whose median rent of $2,764 has remained steady.

For studios, the median rent is up over nine percent to $2,186 and for three-plus-bedrooms the median rent is up about four percent to $3,800. The real shocker comes for two-bedrooms, where the median rent has increased year over year by nearly 29 percent (!!!) to $3,625. One possible explanation for the major jump could be the rate at which new rental buildings are hitting the market in the borough, and the mix of apartment sizes they’re offering up.

TL;DR: It’s a lonely endeavor to believe that New York City rents will ever be truly attainable again, but at least they’re not getting worse—right now, anyway. The records this month are in concessions, not rents themselves. (Phew.)

• Elliman Market Reports [official]
• NYC Rental Market Reports [Curbed]