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. 

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net.

To contact the editors responsible for this story: Daniel Taub at dtaub@bloomberg.net, Christine Maurus, Kara Wetzel

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