Landlords continue to have the upper hand when it comes to Manhattan’s residential rental market, according to fourth-quarter reports released today by brokerages Prudential Douglas Elliman and Citi Habitats. The median asking rent climbed 6.6 percent over the last year, and vacancies were filled at a near-record pace, according to Elliman, while both firms reported a sharp decline in concessions.
The primary reason is the lack of access to credit, which has allowed fewer individuals to enter the sales market, said Jonathan Miller, president and CEO of Miller Samuel and the author of the Elliman report. ”The reason that rents are climbing doesn’t have much to do with the economy improving,” as would normally be the case, Miller said. ”It has everything to do with a weak economy, and this global economic breakdown that we’re having.”
Along with falling temperatures, the fourth quarter generally brings a seasonal lull in rental activity compared to the previous quarter, an average 17 percent drop since Miller began tracking the rental market in 1991. This year, however, the drop was a mere 0.7 percent, Miller said.
”Some people probably put off their searches till later in the year, hoping that market conditions would turn,” said Gary Malin, president of Citi Habitats. ”We saw a decent amount of activity at the end of the year because of that.”
On average, renters snapped up apartments in 37 days, the Elliman report says, down from 44 days in the previous year, and the second fastest pace since the firm began tracking the number in 1995. (The fastest pace was 33 days, in the second quarter of 2011.)
Although listing inventory rose 22.2 percent to 4,721 units, according to Elliman, rents continued to increase across almost all unit sizes and neighborhoods.
The average rent rose 8.4 percent year-over-year, to $3,309 from $3,046 per month, according to the Citi Habitats’ report, which covers the firm’s transactions. The increases took place across-the-board, with similar gains in smaller and larger units, the report says.
The effective median rent, which factors in landlord concessions such as a free month’s rent, climbed 9.5 percent, to $3,635 per month, according to Elliman, which collects market-wide rental data from the firm, Miller Samuel and the Real Estate Board of New York.
But landlords were far less likely to sweeten the deal for would-be tenants.
Overall, landlords offered concessions at 7.4 percent of units– a staggering drop from the 40.5 percent of units that came with perks in the fourth quarter of 2010, according to Elliman. Citi Habitats found that concessions were offered at 68 percent fewer units than in the previous year, when nearly a third of apartments came with some sort of bonus. In the fourth quarter of 2011, only 10 percent of apartments had concessions, the Citi Habitats report says.
”Owners really didn’t need to offer a lot to entice consumers to sign on the dotted line,” Malin said.
Still, when adjusted for inflation, the median rent in the fourth quarter of 2011 was still 22.7 percent lower than the peak of $3,265 per month in the fourth quarter of 2006, according to Miller. ”We’re not breaking new ground,” he said.
The tight rental market is not only a feature of the last few months but the year as a whole. In all of 2011, rental activity increased by 5.4 percent, more than double the rate in 2010, while prices averaged about $200 more than last year’s, according to an annual rental market report released today by residential brokerage MNS. The starkest growth occurred in two-bedroom doorman apartments, where average rents spiked 8.6 percent between 2010 and 2011 to $5,646 per month.
Manhattan’s overall vacancy rate in 2011 was 0.96 percent, and Soho/Tribeca had the lowest vacancy rate at 0.55 percent, according to Citi Habitats. Not surprisingly, renters paid a premium for living there: in the fourth quarter, the $3,575 average monthly rent for a one-bedroom was Manhattan’s highest Washington Heights offered the least expensive one-bedrooms in the borough, at $1,400 per month.
The findings echo a New York City report recently released by RentJuice, a national real estate listings site.