Rental concessions in NYC are here to stay for the foreseeable future, reports say

Real estate firms in the city say concessions for rental properties aren't going away any time soon.
Real estate firms in the city say concessions for rental properties aren’t going away any time soon. Photo Credit: Jeff Bachner

Concessions for rental apartments aren’t going away any time soon, two new reports suggest.

In their monthly rental market assessments released Thursday, both Douglas Elliman and Citi Habitats highlighted how landlords trying to fill units are paying a broker’s fee usually paid by tenants or waiving rent — often for a month.

Executives at the firms offered different explanations for the reliance on incentives: a glut of new apartments have given renters the upper hand, more New Yorkers are willing to move farther from Manhattan and stagnant salaries have put asking rents out of reach.

But both agreed that while rents remain high, the concessions are here to stay.

“I don’t see anything on the horizon that would tell you that [concessions] are going to disappear any time soon,” said Gary Malin, president of Citi Habitats.

In July, 24 percent of Citi Habitats’ rental deals came with a concession, whereas last July, just 19 percent of leases involved incentives.

Malin said rents simply got out of hand, given that many New Yorkers’ salaries have not significantly increased and more and more households are paying off student loans.

Hal Gavzie, executive manager of leasing at Douglas Elliman, said several new buildings rising across the city have made it harder for landlords to attract tenants.

“Customers have quite a bit of choice right now,” Gavzie said. “There still is a lot of new developments coming on the market, so I think we’re going to be looking at this [use of concessions] over the next year or so, at least.”

Douglas Elliman’s report noted that 26.5 percent of leases it worked on included concessions in Manhattan, up from 10.8 percent last year. In Queens, incentives were used on 40.8 percent of transactions; and, in Brooklyn, they figured in 22.1 percent of deals.

When factoring in waived rent payments, Douglas Elliman found the median monthly rental rate on its Manhattan deals fell 1.9 percent to $3,350 over the last year, and the median monthly rental rate on Brooklyn leases dropped 1.8 percent to $2,745.

Gavzie said some rents were unrealistic, especially considering how many new apartments are being built and how many areas New Yorkers are now willing to relocate to.

“In the past they’ve looked at five units; they’re now looking at 10 to 15 units,” he said. “They just know that there’s more inventory out there and they’re seeing all these concessions, so they’re taking a little more time and they’re looking farther out.”

(With Alison Fox)