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Influx of high-priced rentals has pushed Manhattan’s median price up

May’s rental transactions of $15,000 or higher more than doubled compared to last year

A Nomad apartment now on the market for $15,000/month.

An influx of new development rentals, and a large number of new leases signed over $15,000, pushed median rental prices up in Manhattan this May according to Douglas Elliman’s monthly market report tracking rental prices in the borough as well as Brooklyn and Queens.

In Manhattan, May’s median rental price increased 2.2 percent from last year to $3,475, while the average rental price rose 4.4 percent, to $4,208. Jonathan Miller, author of the report, explains that the only reason for that price bump “is that there was simply a lot more new development rental product in the mix.” He continues, “For example, the number of new leases for Manhattan, $15,000 and higher, literally doubled. It doesn’t matter whether rents [broadly speaking] were up or down, there were simply more high end rental units” driving the median up. The number of new leases signed for May increased 17.1 percent to 5,969.

It’s the same old story with concessions—they still dominate. The share of new transactions with rent concessions was 25.1 percent, nearly doubled from last May’s 12.6 percent. Renters are now nabbing 1.3 months of free rent or an equivalent perk, up just slightly from this time last year. With concessions factored in, the cost for May’s median Manhattan rental came out to $3,377. And by offering renters perks, landlords have lowered the vacancy rate—it fell from 2.51 percent a year ago to 1.72 percent.

“The vacancy rate fell below 2 percent for first time in two years so concessions are working,” Miller says. But he adds that “the fact that concessions remained high reflects the market remains over supplied.”

The Brooklyn market remains soft, as it’s been for the past six months. “Brooklyn didn’t see the crazy, high-end skew that Manhattan did,” Miller says. Brooklyn median rent declined 1.9 percent from May 2016 to $2,820. (For those counting, that’s $655 less than Manhattan median rent.) The number of new leases, however, jumped 22.8 percent to 1,460. That rise in new leases reflects more new development coming onto the market, as well as tenant pushback at the time of lease renewal.

Landlord concessions were nearly doubled from the prior year, from 8.8 percent to 15.2 percent. The size of concession in Brooklyn is higher than Manhattan at 1.5 months of free rent or equivalent, also up just a hair from this time last year. And the median rent in Brooklyn, accounting for all the perks, came in at $2,782.

While new development makes up 15.5 percent of the Brooklyn market, it makes up a whopping 38.7 percent of the market in Northwest Queens. (Nearly four out of 10 rentals are new development buildings, according to Miller.) That means, unsurprisingly, that concessions are plentiful in neighborhoods like Sunnyside, Long Island City, and Astoria. The use of concessions has quadrupled in a year, up from 9.7 percent to 37.9 percent.

The median rental price for Northwest Queens apartments was $2,990, up 9.6 percent from last year. (That’s $170 more than Brooklyn median rent, the second highest difference between the boroughs in more than two years.) The median factoring in concessions in comes to $2,902, or $120 more than Brooklyn.

Citi Habitats also released its rental report and found the Manhattan vacancy rate fell to the lowest level since August 2015. The brokerage firm still found that apartment hunters were price sensitive, meaning that 22 percent of new leases in May included signing incentives or concessions.

By Citi Habitats numbers, Manhattan rents increased three percent for studios since April, and rose one percent for three-bedroom apartments. Pricing for one- and two-bedroom apartments was relatively unchanged from the month prior. The average Manhattan apartment went for $3,530 per month, just $18 more than it did in April.

The report found average rents in Brooklyn increased for all kinds of apartments when compared to the month prior. Studio apartments in the borough, in the 14 neighborhoods studied by the firm, rented for $2,277 a month on average. One-bedrooms averaged at $2,868, while rents for two- and three-bedrooms came in at $3,762 and $5,140.

Finally, the most expensive Manhattan neighborhood for renters this May was SoHo/TriBeCa—shocker!—with a median rent of $5,925. The cheapest was Washington Heights, with a median rent of $2,175.

It’s the same old for Brooklyn, where DUMBO was the most expensive neighborhood in May with a median rent of $4,750. Bedford-Stuyvesant, with a median rent of $2,495, was the least-expensive Brooklyn neighborhood tracked in Citi’s report.