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Manhattan's rent surge is cooling as tenants push back on hikes

Rents are rising by under 1% compared to 3% in most months this year

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Signs of a cooling market in Manhattan are already there. Newly signed leases slipped 13 per cent in October, the sixth year-over-year decline in seven months.

New York

THE great Manhattan rent surge of 2019 is tapering off. Apartments leased for a median of US$3,409 in October, up 0.7 per cent from a year earlier, according to a report on Thursday by appraiser Miller Samuel Inc and brokerage Douglas Elliman Real Estate. It was the second consecutive increase of less than one per cent. Before that, rents had climbed at least 3 per cent in almost every month this year. Manhattan's leasing market has become an attractive place for people delaying a home purchase, and landlords - who just a year ago worried about filling empty units - have benefited from the increased demand. They scaled back move-in incentives and pushed up rents, even getting a median 6.5 per cent increase in July. But as sales prices fall, some fence-sitters are making purchases. The tenants left behind, meanwhile, are stretched to the limit of what they can spend and are pushing back on landlords who want to raise rents further.

Signs of a cooling market are already there. Newly signed leases slipped 13 per cent in October, the sixth year-over-year decline in seven months. Of those deals, 37 per cent came with a landlord concession, such as a month's free rent. That's a large enough share to suggest that sweeteners are still necessary to attract tenants, Jonathan Miller, president of Miller Samuel, said. The vacancy rate, now at 2.03 per cent, has increased over the previous year for the fourth consecutive month, Miller Samuel and Douglas Elliman said. Median rents climbed year over year in all but two Manhattan neighbourhoods tracked by brokerage Citi Habitats. In the Tribeca and Soho neighbourhoods, the priciest in the borough, leasing costs jumped 10 per cent from last October to US$7,990. Rents are up 15 per cent in Chelsea to US$4,830, and on the Upper East Side, they climbed 7.3per cent to US$3,730, according to the brokerage. BLOOMBERG

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