A newly released report found that despite a slight decline in rents across the board in Manhattan and increases in landlord incentives, there is still a disconnect between what landlords are offering and what tenants can afford to pay.
Citi Habitats released its Rental Market Analysis for November 2016 Thursday, showing that the borough’s vacancy rose to 2.11 percent — the highest rate in more than seven years.
On average, apartments in the borough rented for $3,490 in November 2016, $8 less than the previous month. This decrease came to a 1 percent dip in all size units, from studios to three-bedrooms. But on a year-to-year comparison, rents increased by $26.
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November’s vacancy rate increased from both the previous year, and at 2.11 percent is the highest it’s been in Manhattan since April 2009, according to Citi Habitats data. Specifically, the vacancy rate was highest in the West Village at 2.69 percent, followed by theUpper West Side at 2.23 percent.
“There remains a disconnect between what tenants can afford to pay, and what landlords believe tenants can afford to pay. Many people are simply at their breaking point. Building owners continue to lean on concessions to drive traffic, but these incentives have yet to lower the vacancy rate as anticipated,” said Citi Habitats President Gary Malin.
Citi Habitats found that 27 percent of rental transactions brokered by them offered a free month’s rent and/or payment of the broker fee to entice new tenants in November — up from 1 percent in October and 13 percent in November 2015.
Rent concessions and other incentives are aimed mostly at the upper end of the market, according to real estate experts. They are typicallylimited to the upper 40 percent, with the biggest bargains going to the top 10 percent.
Concessions can be a “tale of two markets,” according to Malin, because they are usually effective for the terms of the initial lease.
“Those who can afford the apartment — incentive or not — are getting great discounts,” he added. ”However, if a client is on the fence financially, current offers are still giving them pause versus spurring them to act immediately. They are thinking not of the cost of year one when the incentive’s in play — but year two, when it’s off the field.”