The number of Manhattan landlords offering sweeteners, such as a month of free rent or payment of broker’s fees, has doubled from a year ago.
According to Douglas Elliman Real Estate and Miller Samuel’s latest snapshot of Manhattan’s rental market released Thursday, the share of new rental transactions with so-called concessions was 28.4% in March, up from 13.6% a year earlier. This was the second highest on record.
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Landlords have been employing these incentives for renters often over the past few months amid an oversupply of new rentals (listing inventory was up 16.6% year-over-year to 7,212) in a bid to protect base rents and prevent the vacancy rate from rising.
However, the median monthly rental price increased 3% in the year to March to $3,400. When concessions were factored in, it was up 1.2% to $3,294. This was the first time median rent with concessions increased for first time in eight months.
In the luxury sector, defined as the top 10% of the market, median rents were up 9% year-over-year at $8,995, while the number of new leases rose 23.9% at 477.
Jonathan Miller, the chief executive of Miller Samuel and author of the report, told Mansion Global that this was due to a number of high-end luxury buildings, which hit the market last month. Higher rent at these buildings pushed up the median rent. Indeed, the number of new leases in new developments jumped 72.5% year-over-year.
"The reason you’re seeing an uptick in rent, especially in the luxury market, is because there was a large number of high-end rentals that entered the market, which skewed overall price trends. It’s a random event not a market event," he said.
"The market hasn’t changed much in the last six months. We’re seeing landlords continue to use concessions aggressively to keep the vacancy rate from rising and it’s been working," Mr. Miller said. "The question going forward is will they have to continue this and I would say it’s highly likely due to the influx of new rentals."
In Brooklyn, where many New Yorkers have fled to over the past few years in search of cheaper rent, concessions also more than doubled in the year to March from 6.6% to 16%, while the number of new leases jumped 33.5% to 1,211.
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After five months of year-over-year declines, median rent rose 2.6% to $2,847 in Brooklyn. Including the impact of concessions, median rental price increased 2% to $2,806.