Thus far, 2017 is the year of rental concessions. January kicked off with rising concessions in a softening market, and February reports showed that those offerings were at their second highest level in Brooklyn and Manhattan, and had nearly doubled in Queens from the same time last year. Simply put, it has been a good year to ask for some freebies from your landlord.
In Manhattan, 28.4 percent of leases signed had some sort of concession, as opposed to 13.6 percent one year ago. On average, landlords offered 1.3 months of free rent as compared to 1.2 months. The median monthly rent factoring in concessions is $3,294, compared to $3,256 last March. That’s the first time median rent with concessions has increased in eight months. The median rent for the entire market also rose 1.5 percent from last year, to $3,400.
So why the rising concession alongside a rising median rent? “Even though median face rent increased, that was because there was a slew of high end new development coming on to the market,” says Jonathan Miller, who crunches numbers for Douglas Elliman’s market report. He calls it a “random event ... when these units come to market as construction is finished.”
Miller noticed that rents were rising for non-doorman buildings, while doorman rents slipped. The median for doormen rents was $3,700, 1.5 percent lower than last year; non-doorman rents were $2,895, 3.6 percent higher. This follows an ongoing trend: the top end of the market is soft, while competition remains fierce for cheaper apartments.
Over in Brooklyn, concessions more than doubled to the second highest share on record: 28.4 percent of apartments came with some kind of freebie. The median rent for a Brooklyn apartment is $3,400, but with concessions, it actually works out to $3,294.
The $3,400 median is the first time it’s rose year-over-year after five months of declines. Miller says the rise is also caused by lots of new development in the market, with new leases for new development up a whopping 133 percent. “More high end leases, whether or not they are rising or falling in price, skewed the overall results,” Miller says.
On to Queens, where Miller has just started tracking concessions offered. There, concessions “doubled like the other boroughs but at a higher share, because new development dominates that market,” he says. And so 42.7 percent of leases came with concessions as opposed to 19.7 percent last year. The median rent with concessions was $2,734 as opposed to a median rent overall of $2,800.
Citi Habitats also released its rental report, and found that average rents in Manhattan and Brooklyn increased for all apartment categories compared to last month. Pricing in Manhattan was up by an average of two percent for both studio and three-bedroom apartments, while average rents for one- and two-bedroom units increased by one percent. In Brooklyn, average rents rose two percent for studio, one and two bedroom apartments during March, while rents for three-bedroom apartments increased by an average of 1 percent.
The firm found a slight increase in demand for Manhattan rentals but noticed renters tended to be price sensitive—which, again, makes the freebies landlords offer go up. For March, 35 percent of new leases signed with Citi Habitats included some form of concession, up from 31 percent in February. According to the firm, “Typically, incentives become less prevalent as spring approaches, so the increase in their use month-over-month is noteworthy.”
- Citi Habitats March and Q1 2017 rental market report [Citi Habitats]
- The Elliman Report: Manhattan, Brooklyn & Queens Rentals [Douglas Elliman]