Landlords dialed back the concessions last month as they continued their delicate balancing act with renters.
According to Citi Habitats May rental report, average rents remained stable in both Manhattan and Brooklyn, the vacancy rate fell, as did the percentage of new leases that offered a move-in incentive.
“Through their effective use of concessions, owners have dramatically reduced the vacancy rate over the last six months,” explained Gary Malin, president of Citi Habitats.
“However, since February, they have begun to dial back the freebees offered to new residents while keeping their face rents relatively unchanged.”
While landlords have created positive absorption, they have yet to achieve higher pricing. “It’s a delicate balancing act,” said Malin. “The goal is to find the right overall proposition that will convince tenants to act.”
The May 2018 Citi Habitats rental report put Manhattan vacancy at 1.27 percent and marked the sixth consecutive month of vacancy rate decline.
This consistent and steady drop is unusual. The last time vacancy fell for such a prolonged period was from December 2013 to June 2014.
The report found that 19 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 May – down from 26 percent in April.
Year-over-year, their use is also down. In May 2017, 22 percent of tenants received a concession from their landlord.
The use of move-in incentives has dropped considerably over the last three months. As recently as February of this year, they were found on 46 percent of new leases – and in November of 2017, they were found on more than half (51 percent).
The May average monthly rental price for a Manhattan studio was $2,364. For one-bedrooms it was $3,207; two-bedrooms $3,989 and; the average three-bedroom apartment rented for $5,327.
Brooklyn studio apartments (in the 14 neighborhoods studied) rented for $2,312 per month on average.
For Brooklyn one-bedrooms, the average rent was $2,837, while two- and three-bedrooms clocked in at $3,685 and $4,872 respectively.
The most expensive Manhattan neighborhood for renters in May was SoHo/TriBeCa, with a median rent of $5,100.
For Brooklyn, DUMBO was the most expensive neighborhood in May, with a median rent of $4,700.
The cheapest Manhattan neighborhood last month was Washington Heights, with a median rent of $2,250.
Bedford-Stuyvesant, with a median May rent of $2,400, was the least-expensive Brooklyn neighborhood tracked in the Citi Habitats report.
Among its listings, Douglas Elliman found just over half-a-percent jump in median Manhattan rents, which it attributed to a surge in new leases skewed towards larger apartments.
The share of new rental transactions with rent concessions was 37.6 percent up from 25.1 percent at the same time last year.