If you were hoping for some good news about New York rents becoming attainable, you’ll have to keep waiting. The stats are out for July rentals in Manhattan, Brooklyn, and Queens, and it’s more of the same: the use of concessions is still high throughout the boroughs, and rents remain high right along with them. The lack of more affordable apartments coming to market in manhattan continues to put pressure on lower-priced inventory, causing their median price to rise.
But in the northwest section of Queens that Douglas Elliman tracks, things are on the up, and up, and up. In July, the median rent rose 8.3 percent from this time last year to $2,998. The jump in rent is particularly precipitous in Queens because more than one-third of the apartments hitting the market are in new developments that skew towards luxury. The housing itself is higher quality, bringing higher pricing along with it—it isn’t values that are jumping here, unlike in Manhattan and Brooklyn.
Along with that rise in median rent came a five-fold increase in the use of concessions from this time last year. At that, nearly 41 percent of new leases in Queens in July included a concession like free rent. (Prospective renters take note: this is the time to wrangle that discount.)
In Brooklyn, the median rent excluding the use of concessions dropped just over one percent from this time last year to $2,795. That puts the median Brooklyn rent lower than that of northwest Queens, but unlike in that area, Brooklyn rentals in areas tracked by Douglas Elliman are not all shiny and new. Only Brooklyn studios saw an increase in median rent in July, up to $2,493 from $2,181 in July 2016.
The use of concessions in Brooklyn set a record high this month, with an average of 1.4 months free rent or equivalent on offer. (By comparison, when the use of concessions kicked in in Manhattan in 2015, landlords were offering up about 1.5 months of free rent or equivalent.) Elliman data guru Jonathan Miller expects that the use of concessions in Brooklyn won’t reach Manhattan’s highs, noting that the Brooklyn market is already softening.
Meanwhile, in Manhattan, the top of the market is as soft as the downy pillow the 1 percent rest their heads on. Miller says this is because many of the luxury and super luxury condos developed in the prized borough during its development boom ended up on the rental market. (See here, here, here, and here.) “No Manhattan developers understood that those luxe and super-luxe units would be competing with the rental market when they closed,” Miller adds.
The median rent for entry-tier Manhattan apartments rose in July, from $2,344 this time last year to $2,400. Similarly, the median rent for doorman buildings, which are generally more expensive, slipped to $3,837 while the median rent for non-doorman buildings, generally less expensive, rose to $3,000, proving there’s higher demand for less expensive apartments. The median rent in Manhattan’s luxury tier even slipped from $7,889 to $7,875.
It seems likely that the use of concessions in Manhattan has already topped out. “Tenants are not thrilled about renting an apartment they can’t afford without concessions,” Miller says, noting that as rents start to decline, landlords won’t be able to continue offering the extras that made the apartments attainable in the first place.
Citi Habitats also found that the use of concessions is stagnating. While the use of concessions rose year-over-year from 19-percent of leases to 24-percent of leases, that number fell from June 2017’s 28 percent of leases on offer with concessions.
“In the current environment, tenants have been trained to expect a ‘good deal,’” says Citi Habitats’s president Gary Malin. “For owners to achieve the right velocity, they need to offer concessions that are not only attractive in their local sub-market, but also when compared to buildings in competing areas. Many tenants are no longer hyper-focused on a certain neighborhood. Instead, they are willing to explore a variety of housing options across all boroughs.”