One World Trade Center towers over lower Manhattan in New York. Photo: Reuters

Manhattan renters score record incentives in apartment glut

At the end of last month, there were 7,132 apartments available for rent in Manhattan, a 23 per cent jump from October 2015

Manhattan landlords are giving renters more financial incentives than ever in a bid to keep apartments from going empty while the market gets flooded with new supply.

Lease-signing sweeteners, such as a month of free rent or payment of broker fees, were offered on 24 per cent of new rental agreements in October, up from 10 per cent a year earlier, according to a report Thursday by appraiser Miller Samuel Inc and brokerage Douglas Elliman Real Estate.

It was the biggest share for any month since the firms began tracking the data six years ago. Landlords also agreed to cut an average of 3.1 per cent from their asking rents in order to reach a deal.

Property owners in Manhattan are working harder to lure tenants who now have the ability to bargain-shop amid a surge of high-end apartment construction that shows no signs of abating.

The final months of the year are considered to be the slowest time for apartment leasing in New York City, adding to the urgency for landlords, said Jonathan Miller, president of Miller Samuel.

“Concessions are one way to keep the vacancy rate in check and keep the buildings as full as possible,” Miller said in an interview. “It’s a baseline metric we’re going to be dealing with for the next several years, at least.”

At the end of last month, there were 7,132 apartments available for rent in Manhattan, a 23 per cent jump from October 2015, according to the report. The annual growth in listings has topped 20 per cent every month this year since March.

Residences on Fifth Avenue on the Upper East Side of Manhattan. Photo: AFP

In Brooklyn, the inventory of available units surged 26 per cent to 2,564, the most in almost eight years of record-keeping, the firms said. Move-in concessions were offered on 12 per cent of new leases signed in the borough last month, compared with 7.9 per cent a year earlier.

“There must be great concern because of how much competition has been added to the market over the last couple of years,” Miller said. “This is probably not a temporary blip.”

For Manhattan apartments, the median rent rose 0.3 per cent from a year earlier to $3,400 a month, Miller Samuel and Douglas Elliman said. But when factoring in the value of concessions, the median actually declined by 1 per cent.

“Incentives remain the preferred alternative for owners to keep face rents high while creating a sense of value in the marketplace,” Gary Malin, president of brokerage Citi Habitats, said in a separate report on the rental market Thursday.

Citi Habitats said concessions were offered on 26 per cent of leases the firm brokered in October, up from 8 per cent of deals a year earlier.

The fancier and more costly the apartment, the more landlords had to offer enticements. In Manhattan buildings with doormen, 31 per cent of new leases last month came with incentives, Miller Samuel and Douglas Elliman said. In buildings without lobby attendants, sweeteners were given on 17 percent of new agreements.

This article appeared in the South China Morning Post print edition as: Manhattan renters get record incentives amid glut