Incentives offered by Manhattan landlords may have worked early in 2017 but recent data shows that apartment hunters are no longer buying into their strategy as the borough’s vacancy rate in October posted 2.6%, a figure slightly lower than this year’s highest level of 2.7%.
According to a report by Douglas Elliman Real Estate and Miller Samuel, Inc., the October 2017 vacancy rate recorded was the highest for the month in 11 years of data collection. Median rent in buildings without doormen also fell by 1.9 percent from 2016’s $2,840 recording the first decline for the category in 20 months, as well as the biggest since February 2014.
“Landlords, and probably tenants, are leery of renting out an apartment where, if the concessions weren’t offered, the renter couldn’t afford the apartment,” said Jonathan Miller, CEO of Miller Samuel.
Miller also stated in the report that in order to attract more tenants, landlords would need to reduce their face rents. He pointed out that the situation is already happening in Brooklyn and Queens where the median net effective rent fell in October 2017.
Meanwhile, Manhattan apartment buildings with doormen saw an increase, with rents higher by 1.3 percent in October 2017 posting the largest increase in more than a year and a half. Median rent in the category recorded $3,900.
Hal Gavzie, leasing manager for Douglas Elliman attributed the increase to “compelling” incentives offered by doormen building landlords, such as rent-free months and complimentary access to gyms. “A lot of these doormen buildings have a lot of vacancies and they are offering quite a bit of incentives,” he said.
Rental freebies may not reduce anytime soon as the report predicted that to keep vacancy rates from rising as new developments enter the market, landlords must offer more incentives.