Spiraling New York City rents have led to resistance from tenants and an increasing focus on givebacks and concessions on the part of landlords, according to new reports.
The monthly Elliman Report out Thursday showed 13% of new Manhattan leases included concessions in April, up from 2.7% a year before, while 6.5% of Brooklyn leases featured them, a jump from 3.6% a year ago.
The data indicated a decrease in concessions to 1.2 months free rent in Manhattan and 1.6 months in Brooklyn, down from 1.8 months last April, but its a powerful indicator of what could be a significant burgeoning trend in NYC real estate, experts said.
“The pace of growth has cooled,” said Jonathan Miller, president of the real estate appraisal firm that prepared the data for Elliman. “We’re going through some sort of affordability threshhold.”
Even though the city is experiencing robust employment growth and “population growth five years ahead of census projects,” as Miller put it, there is increasing resistance to forking over average prices of $4,119 a month in Manhattan, $3,054 in Brooklyn and $2,824 in Queens.
“That’s why you’re seeing these concessions by landlords,” Miller said.
Still, for renters who can’t afford these posh prices, concessions won’t have much of a benefit, observed Gary Malin, president of Citi Habitats. His company determined that 19% of its transactions in Manhattan last month included a concession.
Further, concessions aren’t necessarily a great deal for anyone planning to stay put, noted StreetEasy data scientist John Wiley. “While a concession will lower the rent for the first year or two … it allows the rent to reset to the higher, concession-free amount at the end of the term,” he wrote on the real estate website.
“No fee” apartments have also become more popular, Wiley wrote, making up 40% of StreetEasy’s Manhattan and Brooklyn listings and 28% of its Queens listings this March.
Landlords frequently advertise apartments with rents “asterisked,” factoring in a concession, misleading renters into thinking the apartments are cheaper than they are, noted Virginia Smith, senior editor at Brick Underground.
She counseled avoiding a rental search during the summer, which is always “the busiest and most expensive rental season of the year.”
A free month’s rent or commission paid by the landlord means little to people who aren’t shopping at the top of the market, Smith said, noting that “the reality of the market is whatever it is for you.”
For Joey Schaefer, 29, an architectural metal worker and welder who makes about $45,000 a year, and who has been trying for a year to find an apartment with his girlfriend, reality is discouraging.
Schaefer, who lives in Ridgewood with four other guys, had budgeted about $1,500 a month for a one bedroom in Queens, realizing he had long ago been priced out of the East Village neighborhood where he grew up. The few studios he found at that price represented “twice as much money for half as much space,” than he has now. “It’s very frustrating,” said Schaefer.
He is number 11,462 on a wait list for an “affordable” unit in Stuyvesant Town and on other affordable housing lists as well, but doesn’t count on anything coming through soon. “I would love to see more affordable housing, but I don’t see that happening,” said Schaefer. “It’s very frustrating.”
Some people like Schaefer are giving up on NYC, said Miller, noting there is “near record sales activity in the suburbs,” in communities on Long Island and in Westchester County and Connecticut. “There is an outward radical push from the core” of the boroughs in search of affordable housing, Miller said. (with Ivan Pereira)
Share of new rental transactions with givebacks was 13%, up from 2.7%
Size of concession was 1.2 months of free rent or equivalent, down from 1.8
Share of new rental transactions with givebacks was 6.5%, up from 3.6%
Size of concession was 1.6 months of free rent or equivalent, down from 1.8 months