The busy summer real estate season has come to an end with a record number of leases signed. In fact, August has the largest number of leases signed since the data started to be collected nine years ago. When looking at just the past year, the number of new leases signed also increased dramatically by 12.3 percent o 7,061. These figures reflect the number of leases signed for new developments as well as those signed as tenant pushback to get better deals.
Increased Leases Do Not Bring an End to Concessions
Typically, the months of July and August are the peak months for leases in New York City, but there is also a lot of new product in the market that is being leased up. Furthermore, concessions haven’t disappeared. In fact, the number of perks being offered by landlords in Manhattan has doubled when looking at year-over-year data to 24.1 percent. On average, these concessions have offered 1.3 months of free rent or the equivalent.
Across Manhattan, the median rental cost increased by 1.3 percent when comparing year-over-year data to $3,442. The average rent increased by 1.4 percent to $4,088 during this same time period. When factoring in concessions, the median rental price increased by 0.5 percent to $3,377.
In Brooklyn, concessions remain high while rent is going down, though only slightly. More than 20 percent of all leases in the borough had some kind of concession, resulting in a net effective median rent decrease for the fourth consecutive month. The most recent decrease was 0.3 percent to $2,851 when comparing year-over-year data. The overall median rental price increased by 0.2 percent to $2,900 while the price per square foot fell by 0.1 percent to $46.68.
The landlord concessions market share was a bit different in Queens, where it was five times higher than last year as it increased from 8.7 percent to 44.7 percent. Inventory was also up by 12 percent over the same time last year, with year-over-year increases taking place for the 22nd time in the last 24 months. With 43 percent of all activity being new development, the new supply requires significant concessions from landlords.
During this same time, Queens also saw its first annual decline in median rent in five months, falling 1.2 percent to $2,859. When factoring in concessions, which are typically at around 1.2 months of free rent or equivalent, the rate fell by 3.6 percent to $2,764.
Demand for Cheaper Units on the Rise
With many of the newer units leaning more toward the luxury end of the market, the demand for smaller, cheaper units has been on the rise. This is particularly true of studios and one-bedrooms, which are encountering a great deal of pricing pressure.
Overall, the rent in Manhattan and Brooklyn has remained relatively stable and near historic highs. At the same time, the vacancy rate has declined. As such, concessions continued to remain prevalent in the summer, with 31 percent of apartments coming with free rent, no broker’s fee or both. This figure represents a 24 percent increase when compared to July. At the same time, the average monthly rental price for a Manhattan studio was $2,363 compared to $2,296 in Brooklyn .