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Deals & Dealmakers

As rents reach new high, tenants strike back

Citi Habitats released its Manhattan rental market analysis for July 2015 today. The report found that the market was a “mixed bag” during the month, which is relatively unusual for this time of year.

Typically, conditions are firmly in the landlords’ favor during the summer months.

The average Manhattan apartment rented for $3,501 during July 2015, $8 more than it did in June 2014, when the average was $3,493.

Looking year-over-year, average rents are also up. The average apartment rented for $3,465 during July 2014, $36 less than it did last month.

During July, average rents increased slightly for all apartment sizes, absent three-bedroom homes, where they declined by a marginal amount.

The percentage of new leases that offered a move-in incentive also fell. However, the borough’s vacancy rate climbed to a level not seen in 4 months.

Looking year-over-year, average rents were up across the board. Rents for studio apartments increased the most, by six percent.

Pricing for one-bedrooms rose by an average of five percent. Rents for two- and three-bedroom homes also increased, but much more slightly.  Average rents ticked up one percent for both categories.

In July 2015, the borough-wide vacancy crept to 1.42 percent from June’s rate of 1.13 percent. July’s vacancy rate was at the highest level since March, when the rate was 1.50 percent.

Year-over-year, Manhattan’s vacancy rate also climbed. In July 2014 the borough’s vacancy rate was 1.25 percent (again, compared to 1.42 percent in July 2015).

When examining incentives, eight 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 July, down from 10 percent in June.

Last month’s percentage is also higher than a year ago (July 2014) — when only six percent of new leases included an owner-paid concession.

“The Manhattan rental market seems to have reached its tipping point,” commented Gary Malin, president of Citi Habitats. “Landlords have continued to raise rents and cut back on their use of concessions, and tenants have begun to strike back — by postponing moves, staying put, or exploring housing alternatives in the outer boroughs.”

The report also found that, in July 2015, the average monthly rental price for a Manhattan studio was $2,301. For one-bedroom homes, the average was $3,030. For two-bedrooms, the average rent was $4,069. The average three-bedroom apartment rented for $5,261.

The most expensive neighborhood for renters in July 2015 was SoHo/TriBeCa, with a median rent of $4,898.

The Financial District/Battery Park City was the second priciest area, with a median rent of $4,000.

The least expensive area for renters in Manhattan during July 2015 was Washington Heights, with a median rent of $1,925.  When examining neighborhoods below 96th Street, the Upper East Side’s median rent of $2,500 was the lowest of all areas in this section of the borough.

With a vacancy rate of 0.72 percent, Gramercy was the area with least inventory in July 2015, followed by the Midtown West at 1.16 percent.

On the other end of the spectrum, the vacancy rate was highest in SoHo/TriBeCa. Last month, two percent of rental units in the neighborhood were vacant.

The East Village was the area with second-highest percentage of available homes, with a vacancy rate of 1.87 percent.

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