An annual New York City ritual usually happens around this time, recent college graduates pour into town, degrees in hand, clutching their suitcases and money for their first big city apartment.
At the same time, those who arrived last year or the year before, face their own dilemma — to look for a new place or stay put, as their leases expire en masse.
For rental brokers, this is a time to clean up, or make up for a slow winter. But this year things are different.
Rent rates have remained flat and existing tenants facing some of the lowest vacancy rates in years, are choosing to renew their leases rather than risk a very tight rental market.
In the past, owners who had a turnover of 10% a year, now have “close to zero,” said Marc Lewis, chairman of AC Lawrence.
“This is unheard of in Manhattan. Normally this is the time of year that leases come up. Usually there is a glut of inventory. With this in mind, tenants at the end of their leases should take a close look at the market and their options before committing to making a move,” he said.
Manhattan’s vacancy rate for the month of April was a paltry 1.58 percent, below the average over the past five years, according to Miller Samuel Inc. and Douglas Elliman. The Upper East Side has the lowest vacancy rate at 1.04 percent.
Rental prices are up 6.5 percent over last year, but were virtually unchanged from March, according to Douglas Elliman. Because of low vacancy leading to limited options for tenants, landlords have decided to continue to be stingy with doling out concessions.
Douglas Elliman reported that only 4.7 percent of all leases signed through the brokerage in April had any kind of concession, while Citi Habitats reported that number to be slightly higher at 9 percent.
As far as prices are concerned, three bedroom apartments are the units that have seen the biggest price jump since last month, from $4,949 a month for leases signed in March, to $5136 a month on average for those signed in April, according to Citi Habitats.
Two bedroom apartments in elevator buildings were also up more than the rest, jumping 3.3 percent, or $100 dollars more from March to April, according to AC Lawrence.
Although, they still have lower overall prices, Harlem and Washington Heights were the areas that saw the highest percentage jumps from March to April. The average price for a rental uptown rose by 13.2 percent, the highest in Manhattan, according to Miller Samuel Inc.
In Harlem, the average rental price has gone up more than 18 percent since 2012, while the number of new rentals has dipped by 41.7 percent since last year.
That is leading to limited low-cost options for those looking to move, putting landlords in the drivers seat.
Brokers are reporting that the landlords’ market is leading to some of the largest rent increases for existing tenants they have seen in a while.
“In the past, it was very common for an owner to give a ‘home discount’ to an existing tenant,” said Lewis. “They thought it was better to not have a vacancy as the loss of rent and painting and cleaning cost was not worth the increase.
“Now, with rents up as much as 30% in the past five years, owners are in many cases asking for full rents on renewals. Tenants don’t really have many options so they are paying 10-30% more to stay put.”