Manhattan's Eager Renters Can't Make a Dent in Apartment Supply

(Bloomberg) -- Manhattan’s construction boom has crowded the borough with so many apartments that even in a month where leasing hit a record, the vacancy rate climbed.

Renters signed 7,061 new leases in August, the most for any month in data going back to January 2008, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Despite all those deals, vacancies climbed to 2.27 percent from 2.14 percent a year earlier, the first annual increase since February.

“It really does show just how much inventory there is out there,” said Hal Gavzie, who oversees leasing at Douglas Elliman. “Yes, we have so many leases being signed -- and yet, you still have so many options for customers out there.”

Manhattan landlords spent the summer in hot pursuit of tenants, working ever harder to entice them into leases in an effort to fill apartments before the slower winter months. Owners whittled an average of 2 percent off their asking rents in August, then added concessions, such as a free month, on 24 percent of new agreements -- double the share from a year earlier, Miller Samuel and Douglas Elliman said.

Renters responded enthusiastically, signing 12 percent more leases than a year earlier, not including renewals. That kept pricing stable, too. The median Manhattan rent, after concessions were subtracted, was $3,377 last month, up 0.5 percent from August 2016.

But with builders still churning out new apartment towers, and condo investors listing their units for rent, there’s more than enough for renters to choose from. Manhattan had 7,497 apartments listed for rent at the end of August, or 31 percent more than the monthly average since Miller Samuel and Douglas Elliman starting keeping the data in January 2008.

“We’re going to see prices come down a bit as these landlords get concerned about filling the vacancies before the winter,” Gavzie said. “Nobody wants their apartments vacant in November.”

A report released Thursday by brokerage Citi Habitats showed rents fell last month in almost every Manhattan neighborhood. In the Soho and Tribeca areas, the borough’s costliest for leasing, the median was $5,100, down 15 percent from a year earlier. Upper West Side rents fell 2.8 percent to $3,698, while leasing costs in the West Village dropped 3.8 percent to $3,850.

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