Though most apartment dwellers are singing the rent-is-too-damn-high blues, for the first time in years some New Yorkers are humming a different tune.
With fewer residents willing or able to follow rising rents into the stratosphere, rents are softening, particularly in Manhattan, and more landlords are offering what amounts to rent discounts in the hope of moving their merchandise.
Those concessions come typically in the form of one month’s free rent and skipping the brokers’ fees, said Jonathan Miller of Miller Samuel, a real estate appraisal and consulting firm which does work for Douglas Elliman Real Estate.
In the last year, the percentage of Manhattan apartment rentals carrying concessions rose to 12.6 percent as of this May, compared with only 1.6 percent one year earlier, Miller said. The last time the concession rate was this high was in 2010, when New York and the nation were coming out of the Great Recession, he added.
The incentives are due to high priced-rents that are outstripping customers’ ability to pay, said Gary Malin, president of Citi Habitats, a real estate brokerage firm.
“The market has gotten very pricey and jobs are not being created at a price point that can match these rents,” Malin said.
Most New Yorkers won’t find these deals, however. Rent concessions and other incentives are aimed mostly at the upper end. Miller, the appraiser, said they are largely limited to the upper 40 percent of the market with the biggest bargains going to the top 10 percent.
That’s because the building boom, largely aimed at the affluent, has resulted in an oversupply of these apartments, he said. Meanwhile rents continue to rise for average earners.
Making the situation tougher for folks at middle and lower pay-scales is more competition; many people who would have bought apartments or houses, are stuck in rentals because of stricter loan requirements by lenders.
Rent concessions began to pick up speed nine to 12 months ago and have been increasing ever since, said Constantine Valhouli, co-founder of NeighborhoodX, a real estate analytics startup. Concessions are viewed as more attractive than actual rent cuts because they allow buildings to maintain an attractive rent profile that would be helpful in seeking financing from lenders, and also because it avoids pressure from existing tenants for reduced rents, experts say.
The pressure for concessions has been greatest in Manhattan, where rents rose only 0.6 percent over the year ending in May, in contrast to 4.5 percent in Brooklyn and 8.8 percent in northwest Queens, Miller said.
Valhouli holds out hope that the rent increases which have punished those with more modest incomes may peak soon. Though rents are still rising in New York’s average neighborhoods, Valhouli said some rents are beginning to decrease in parts of another Northeastern city that’s seen a housing boom and rocketing rent rises; some rents are declining in a couple of outer Boston neighborhoods.
“There is a trickle down effect,” he said.