November 04, 2010 By Amanda Fung in Crain’s New York Business
Small increase in October comes as most other signs point to an improving market; average rent for a studio in Manhattan hits $1,837, up 6% from last year.
For the third consecutive month, vacancy rates for Manhattan rental apartments ticked upwards slightly, hitting 1.24% in October, according to latest data from brokerage Citi Habitats.
While the increase comes after eight straight months of declines and even though October marks the third time since April that the rate is above 1%, experts are not concerned. The fact is that the most recent reading still marks a major improvement from October 2008, when the vacancy rate stood at 1.86%, according to Citi Habitats, the city’s largest residential rental brokerage.
Most experts also point to other signs of an improved market climate, including rents that have risen over the last year. Additionally, owners are continuing to dial back concessions like months of free rent. Gary Malin, president of Citi Habitats, noted that the market is still leaning slightly in favor of landlords, although that may change as the holidays and winter months approach.
“What is happening now is normal. The market is still in transition,” said Mr. Malin. “We will have to monitor the macro economy (unemployment and stock market) to determine how aggressive landlords will be with rents and concessions.”
In October, landlords in just 17% of rental deals that Citi Habitats worked on offered a free month of rent and/or offered to cover broker fees. That figure is down from 25% in September and 20% in August. Citi Habitats reported a peak in landlord concessions last December, when 60% of their rental transactions included some type of perk.
Mr. Malin noted that the high unemployment rate and arrival of the slow rental season may result in the return of concessions and the market may begin to move more in favor to the renter. “If the economy wobbles, concessions may come back,” he added.
So far, rents remain healthy and average rents for all sizes of apartments saw an uptick from a year ago. Average rent for a studio in Manhattan was $1,837 in October, up 6% from last year. Average rents for one-bedroom and two-bedroom apartments in October rose 5% from the same month a year ago, reaching $2,509 and $3,459, respectively. Three-bedrooms rented for $4,618 last month, up 3% from last year.