A $500 drop in rents is drawing people back to Manhattan, according to a new report from Douglas Elliman.
With landlords piling on concessions, new leases surged to the highest October total in 12 years after stalling for the past 14 months.
But with over 16,000 empty apartments in the borough, any return to normal is an uphill climb.
Vacancy has climbed to over six percent compared to two percent at the same time last year. It is now at its highest in 14 years after the coronavirus pandemic drove Manhattanites to more suburban and rural areas.
Nevertheless, appraiser Jonathan Miller, who compiled the Douglas Elliman reports, paints a glass half full picture.
“While the usual records continued – high inventory and landlord concessions – Manhattan saw a sharp uptick in new leases for the first time since the summer of 2019,” said Miller.
“Falling rents are beginning to pull people back into the market resulting in the most October new leases signed since the financial crisis.”
According to the report, studio, one and two-bedroom apartments saw the biggest rent drop ever recorded in the borough.
5,641 new leases were signed in Manhattan in October – a 33.2 percent increase on the same time last year. They were listed at a discount that was more than double that offered in October 2019.
With just over 60 percent of all leases signed with concessions, the result was a drop in net effective media rent to $2,868 compared to $3,409 at this time last year.
The picture was similar in Brooklyn, where new leases surged to the second-highest October total in 12 years, as falling rents again expanded market activity.
But despite a 15 percent drop in year-on-year rents, the Queens rental market remains in a slump, according to the report.
According to Miller, “Northwest Queens is one subway stop away from Midtown – but it’s not seeing the uptick in new leases yet like Manhattan is. The lack of activity shows that pricing likely has to adjust more before more renters are pulled in.”
Low interest rates, negotiability, and high inventory are also giving first time buyers a chance at the Big Apple lifestyle.
Last month, Elliman reported that first-time buyers drove the new development market in Manhattan as discount there rose to. The average $3.6 million asking price for a new Manhattan condo ultimately closed at $2.37 million.