Gap between posted rents and what tenants actually pay narrowed hugely last year in Manhattan as apartment market stabilized. The average unit now takes only 44 days to rent.
Landlord concessions for Manhattan rentals continued to shrink as the market stabilized during the fourth quarter, according to a new report released Thursday. The results confirm a Citi Habitats rental report issued earlier this week.
During the fourth quarter, 40.5% of rental transactions in Manhattan had an average concession of one full month of free rent, according to the report by Prudential Douglas Elliman and appraisal firm Miller Samuel Inc.
“Concessions are not dominating anymore,” said Jonathan Miller, chief executive of Miller Samuel. “In 2009, the typical concession for a large portion of new rentals was two to three months of free rent.”
Median rent increased 1.7% to $2,950 during the fourth quarter, from the same period a year ago. Meanwhile median net effective rent—the rent minus landlord concessions such as free rent and other cost savings—was $2,849 for the quarter. This is the first time the report measured net effective rents, so there were no precise comparisons with 2009 figures, but Mr. Miller noted that the gap between the two figures is a lot narrower than it was a year earlier.
“There are no big bumps up or down in rents,” said Yuval Greenblatt, an executive vice president at Prudential Douglas Elliman. “We are seeing stability. Inventory that has entered the market has been absorbed.”
During the fourth quarter, apartments were also being leased out at a faster pace. Apartment listings were on the market for an average of 44 days, well under the 60-day average for the past decade. In the fourth quarter of 2099, apartments were on the market for an average of 76 days.
The number of new apartment rentals surged by almost 200% during the quarter, to 7,217 from the same period a year ago. This was due to the decrease in concessions for lease renewals, Mr. Miller explained, so more tenants were moving to new apartments instead of renewing. The data does not track renewal activity.
“We are going into this year with less inventory and limited use of concessions, so it will be interesting,” said Mr. Miller. “Rental trends are determined by employment, which seems to be improving in the city relative to the nation.”