A new report shows that Manhattan renters are benefitting from the highest July vacancy rate on record, leading to decreased rents across the board when compared to June and an increased level of landlord concessions.
The new analysis, from real estate brokerage Citi Habitats, found that Manhattan’s July vacancy rate was 1.92 percent, the highest vacancy rate for that month since 2002, when the company started tracking the rental market, and greater than July 2015’s rate of 1.42 percent. The average July rent was $3,508, less than June’s average of $3,526.
Also in July, prices declined for all apartment categories, including a 1 percent decrease for studios and two-bedrooms, and a 3 percent drop for one-bedrooms, Citi Habitats reported. Three-bedroom units’ rents declined by a negligible amount.
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"The fact we are trending toward a 2 percent vacancy rate despite the busy summer season shows we are in a very price-sensitive market," stated Gary Malin, president of Citi Habitats. "The use of concessions and slight rent adjustments by owners has failed to significantly move the needle."
Regarding concessions in July, 19 percent of rental transactions brokered by Citi Habitats offered a free month's rent or payment of the broker fee to attract tenants, up from 16 percent of transactions offering similar incentives in June, the brokerage reported. Only 8 percent of leases offered similar deals in July 2015.
"Today’s renters are increasingly open to living in the outer boroughs or New Jersey," Malin said. "In order to reverse this trend, Manhattan landlords will either have to become more liberal with their incentives – or adjust their pricing to reflect the changing conditions."
In July, the most expensive neighborhood for renters was SoHo/Tribeca, with a median rent of $6,310, while Washington Heights' rents were the lowest, with a median figure of $2,200, according to Citi Habitats. The Upper West Side had the highest vacancy rate, with 2.83 percent of rental units available in the neighborhood.