Manhattan renters are pushing back against the market, forcing a drop in rents and rising vacancy, according to a new report.
The Citi Habitats Rental Market Analysis for November 2016 showed that rents declined slightly across the board for all apartment sizes.
Meanwhile, the borough’s vacancy rose to 2.11 percent, the highest rate in over seven years. The percentage of new leases that included a move-in incentive also increased to 27 percent, up from 26 percent in the October.
“There remains a disconnect between what tenants can afford to pay, and what landlords believe tenants can afford to pay,ˮ said Gary Malin, president of Citi Habitats.
“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.
“In addition, because the concession typically is only in effect for the terms of the initial lease, it’s become a ‘tale of two markets.’
“Those who can afford the apartment – incentive or not – are getting great discounts. However, if a client is on the fence financially, current offers are still giving them pause vs 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.”
In November 2016, Manhattan rents decreased one percent across all unit categories – from studios to three-bedroom homes. The average apartment rented for $3,490 in November 2016, $8 less than it did in October.
However, when looking year-over-year, Manhattan rents increased. The average apartment rented for $3,464 during November 2015, $26 less than it did last month.
In November, the borough-wide vacancy rose to 2.11 percent from September’s rate of 1.90 percent. It also increased from the year prior. In November 2015, Manhattan’s vacancy rate was 2.02 percent.
In fact, November’s vacancy rate is the highest seen in Manhattan since April 2009 when 2.28 percent of apartments were vacant.
When examining concessions, 27 percent of rental transactions brokered by Citi Habitats offered a free month’s rent and/or payment of the broker fee to entice new tenants in November – up slightly from 26 percent in October.
Looking year-over-year however, their prevalence increased substantially. In November 2015, 13 percent of leases offered a move-in incentive.
The report found that the average monthly rental price for a Manhattan studio was $2,383. For one-bedroom homes, the average was $3,055. For two-bedrooms, the average rent was $4,137. The average three-bedroom apartment rented for $5,224.
Brooklyn studio apartments (in the 14 neighborhoods studied) rented for $2,362 per month on average. For Brooklyn one-bedrooms, the average rent was $2,783, while rents for two- and three-bedrooms clocked in at $3,656 and $5,041, respectively.
The most expensive Manhattan neighborhood for renters in November 2016 was SoHo/TriBeCa, with a median rent of $5,995. Gramercy/Flatiron was the second-priciest area with a median rent of $4,200.
For Brooklyn, DUMBO was the most expensive neighborhood in November, with a median rent of $4,315, followed by Downtown Brooklyn, where the median rent was $3,385.
Manhattan rents were lowest in November 2016 in Washington Heights, with a median rent of $2,350. When examining neighborhoods below 96th Street, The Lower East Side was the least expensive neighborhood for renters with a median rent of $3,070.
Crown Heights, with a median November rent of $2,450, was the least-expensive Brooklyn neighborhood tracked in the report.
With a vacancy rate of 1.60 percent, SoHo/TriBeCa was the Manhattan area with least inventory in November 2016, followed by the East Village at 1.95 percent.
On the other end of the spectrum, the vacancy rate was highest across town in the West Village. Last month, 2.69 percent of rental units in the neighborhood were vacant.
The Upper West Side was the area with second-highest percentage of available homes, with a vacancy rate of 2.23 percent.