Manhattan’s rental market continued to cool in March, led by a slowdown for apartments in the higher-end of the price spectrum, according to reports released Thursday by the city’s leading brokerages.
The median rent for the 3,489 new leases signed in March fell 3.2% year-over-year to $3,290 per month, marking the fourth consecutive month of rent declines, according to a Douglas Elliman report. The number of leases was down 26.8% compared to March 2016.
The worst performer was the luxury segment, or the top 10% most expensive leases. Rent for those rentals had a median price of $8,437, representing a 6.2% year-over-year decrease, the largest percentage decline across all price points.
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"The luxury rent is still high, but the growth rate is softening," said Jonathan Miller, author of the Douglas Elliman report and chief executive of real estate appraisal firm Miller Samuel.
Another indicator of market weakness is the prevalence of landlords’ concessions. About 32.6% of luxury rentals signed in March had some kind of concession, or "sweetener." On average, luxury renters got 1.6 months rent free or the equivalent, up from the 1.3 months a year ago, according to Mr. Miller.
However, the segment with monthly rents between $10,000 and $15,000 was a bright spot. The median rent of 117 leases signed in this price range was $14,000, increasing 1.8% year-over-year. Reduced inventory (39.1% drop) and landlord sweeteners (1.8 months free rent on average) were largely attributable to the resilience of the median face rent.
For super-luxury rentals, or those with a monthly rent of $15,000 or above, the median rent fell 12.3% year-over-year to $17,450, according to data compiled by Mr. Miller for Mansion Global.
| Manhattan Rental Market in March 2018 | ||||
| Price point/Market share | #of leases | Y-o-Y | Median rent | Y-o-Y |
| Overall/100% | 3,489 | -26.8% | $3,290 | -3.2% |
| $6,500/top 10% | 356 | -25.4% | $8,437 | -6.2% |
| $10,000/top 3.4% | 117 | -40.3% | $14,000 | +1.8% |
| $15,000/top 1.6% | 56 | +17.0% | $17,450 | -12.3% |
| Source: Miller Samuel | ||||
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On a quarterly basis, Manhattan’s overall rental market showed signs of improvement, according to a rental report released Thursday by Citi Habitats.
By the end of March, Manhattan’s median rent remained relatively unchanged compared to the first quarter of 2017, the brokerage said without giving specific numbers. Meanwhile, the vacancy rate fell to 1.77% from 1.93% reported in the same period a year ago.
"With the vacancy rate falling to the lowest level in 10 months, there is increased demand for rental housing in New York," said Gary Malin, president of Citi Habitats, in a statement.
Demand for rental units might increase as some potential buyers decide to hold off apartment purchases due to recent stock market fluctuations and tax law changes, Mr. Malin said.
"Whatever their motivation for renting, tenants remain price-sensitive, so landlord incentives remain in play—especially in the luxury segment—to create a sense of value in the marketplace," he said.