Manhattan Rents Propped Up by Luxury Apartments in Supply Surge

(Bloomberg) -- Rent-free months, price cuts, gift cards, gym memberships. Manhattan’s apartment landlords have been offering all sorts of enticements month after month, hoping to lure renters to their units amid a surge of new supply.

So why hasn’t the median rent declined? Blame all those fancy units in just-built towers with swimming pools and yoga rooms, where rents are so far above the rest of the market that they’re keeping the overall rate elevated -- even when the properties lease at a discount.

Last month, apartments in Manhattan rented for a median of $3,284 after the value of concessions was subtracted, or 0.6 percent more than a year earlier, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The increase was entirely thanks to new development, where the median jumped 7.5 percent to $4,675. Existing rentals, by contrast, leased for a median of $3,300, little changed from November 2016.

“A lot of these developers are looking for a certain price point,” Hal Gavzie, who oversees leasing for Douglas Elliman, said in an interview. “That’s definitely skewing the numbers.”

Getting units rented, however, came at a cost. Of the new leases signed last month, 51 percent came with some type of landlord sweetener -- the highest share since December 2009, Citi Habitats said in its own report. The vacancy rate climbed to 2.14 percent, the highest in Manhattan since April 2009, the brokerage said. 

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