Both the prices and number of luxury Manhattan apartments that were rented fell in November amid oversupply, according to a Douglas Elliman report released Thursday.
There were 380 new leases signed in November with a minimum price of $6,320, the threshold for Manhattan’s luxury rental market—which Douglas Elliman defines as the top 10%. The number was down 4.8% from the same period last year, and down 18.8% compared to October 2017.
The borough’s median luxury rent fell 4.4% annually to $8,225 a month. Compared to this October, the median price was down 2.1%.
Although the luxury rental market was more or less in line with the overall market, the pace of decline is greater at the top, said Jonathan Miller, chief executive of real estate appraisal firm Miller Samuel and author of the Douglas Elliman report.
“The theme continues to be soft at the top, tight in the bottom,” Mr. Miller said.
Across Manhattan, the overall median rent increased 0.3% to $3,360 a month. For the bottom 30% of new leases, which Mr. Miller groups as Entry Tier, median rent increased 0.2% to $2,299; the Mid Tier remained unchanged with a median rent of $3,200; and the Upper Tier, the 30% of new leases just below luxury segment, had a median rent of $4,495, down 0.1% year-over-year.
Super luxury rentals fare better
Super luxury rentals, those with a minimum monthly rent of five figures, remained solid in November. There were 118 new leases signed for $10,000 or above, up 13.2% from the same period last year. Median rents in that sector edged 1% higher, to $14,201.
The number of new leases with a minimum price of $15,000 dropped to 52, a 10.3% decrease from a year ago. Median rent was $19,975, up 2.4% year-over-year.
“The median rents at these price points rose, mainly because of larger, pricier units entering the mix,” Mr. Miller said.
To back it up, Mr. Miller said the average square footage for $10,000-plus rentals reached 2,426, up 13.7% from the same period last year. The $15,000-plus leases averaged 3,075 square feet, increasing 19.8% year-over-year. By contrast, across the overall Manhattan market, rental units averaged 986 square feet, down 1% in size from November 2016.
The most expensive lease signed in November was for a penthouse on East 63rd Street for $65,000 a month, according to Mr. Miller and listings site StreetEasy.
|Manhattan Luxury Rental Market|
|# of leases||380||118||52||3,787|
|Source: Miller Samuel|
Landlord concessions hit record high
Landlord concessions are still prevalent in Manhattan, as the share of new leases coming with sweeteners reached 29.6%, the second highest level on record, according to the Douglas Elliman report.
A separate report released by Citi Habitats shed further light on this phenomenon. According to the firm’s rental transactions, 51% of leases were offered with a free month’s rent and/or payment of the broker’s fee— the highest share since December 2009.
“While historically concessions increase as we enter winter, we haven’t seen them this prevalent since the depths of the ‘Great Recession,’” Gary Malin, President of Citi Habitats, wrote in the report.
But landlord concessions didn’t translate into higher occupancy. According to Citi Habitats, Manhattan’s vacancy rate rose to 2.14% from October’s 2.02%.
“Even with these incentives, Manhattan’s vacancy rate is the highest it’s been in over eight years. This illustrates the widening gap between what tenants are able to pay, versus the rents that landlords want to achieve,” Mr. Malin said.
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