Manhattan landlords offer discounts to beat competition
New York
FOR Manhattan landlords, Christmas usually comes in July - when demand for apartments surges and rents go up. But not this year.
Leasing costs in the borough dropped 1.9 per cent from July 2016, the first decline for the month in at least five years, according to a report by appraiser Miller Samuel Inc and brokerage Douglas Elliman Real Estate. The median net effective rent, or what tenants paid after concessions, was US$3,350.
July is when recent college graduates and families take residence in Manhattan, and landlords capitalise on demand by holding firm on - or increasing - prices. But as the market contends with an unrelenting wave of new supply, owners are using the summer as way to get ahead of the competition. They're offering rent discounts and deal sweeteners in a rush to fill their units before the slower months set in.
"The last thing anyone wants to do, especially now, is rack up vacancies," said Gary Malin, president of brokerage Citi Habitats. "If you rack them up now, going into a slower time, its going to be even harder to achieve your price."
Manhattan landlords offered incentives such as a free month's rent or payment of brokers' fees on 27 per cent of all leases signed last month, up from 11 per cent a year earlier, Miller Samuel and Douglas Elliman said. Those enticements came on top of discounts averaging 2.3 per cent off the asking price.
The lures seemed to work. The number of new leases rose 3.4 per cent to 6,133. The number of apartments available at the end of July slipped 1.8 per cent to 7,545 listings - still 33 per cent more than the 10-year monthly average of 5,670.
More are coming. About 5,500 newly built units will be added to Manhattan's market-rate rental inventory this year, Citi Habitats said in May.
"We're advising landlords and owners to be aware of the inventory and how much is on the market, and to be priced aggressively to move," said Hal Gavzie, Douglas Elliman's executive director of leasing.
On the Upper East Side, the median rent in July was US$3,200, down 4.5 per cent from a year earlier, Citi Habitats said in its report. On the Upper West Side, rents slid 4.1 per cent to US$3,600. In the Soho and Tribeca neighborhoods, the most expensive in the borough, monthly costs fell 5 per cent to a median of US$5,995.
Landlords are "very much aware of what their competitors are doing," said Mr Malin. "They understand that for a lot of tenants, it really does come down to price more than anything else." BLOOMBERG
