Manhattan Landlords Sacrifice Higher Rent to Fill Apartments
(Bloomberg) -- Manhattan apartment vacancies dropped in August to the lowest level in more than four years as landlords, facing the end of peak leasing season, focused on filling empty units before the slower winter months arrive.
The vacancy rate fell to 1.58 percent, down from 2.27 percent a year earlier and the lowest since May 2014, on a record number of new leases, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Taken together with a decline in rents and an increase in concessions, it’s a sign that landlords cared more about finding tenants than pushing the line on prices.
“These landlords know what comes after the summer so, yeah, they definitely want to fill these vacancies as best they can,” said Hal Gavzie, executive manager of leasing at Douglas Elliman.
Manhattan landlords typically pin their hopes for higher rents on the months of May through August, when new college graduates and families seeking to move before the start of the school year boost demand for apartments. But a persistent oversupply of units has prompted a shift in tactics this year.
Owners offered sweeteners, such as a month’s free rent or payment of broker fees, on 35 percent of new leases in August, up from 24 percent from a year earlier, Miller Samuel and Douglas Elliman said. The median rent, with the value of those concessions subtracted, fell 2 percent to $3,310. It was the third straight month with a decline.
The dealmaking worked. There were 7,330 new leases signed in Manhattan in August, the most recorded for any month in data going back to January 2008, according to Miller Samuel and Douglas Elliman.
“The past few years, the strategy of being aggressive and not willing to react to market conditions caused them to rack up more vacancies,” said Gary Malin, president of brokerage Citi Habitats, which released its own report on the rental market Thursday. “They learned their lesson.”
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