Manhattan apartment vacancies reached their highest level in more than nine years, a sign that the post- recession run-up in rents may begin to cool.
The vacancy rate in November was 2.87 percent, up from 2.31 percent a year earlier and the highest since August 2006, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Landlords eager to fill empty units lured tenants with the most concessions since 2011.
The rise in vacancies suggests tenants are reaching the upper limits of what they’re able to pay after more than four years of almost continuous rent growth, according to Jonathan Miller, president of Miller Samuel. In November, the median monthly apartment rent climbed 3.9 percent from a year earlier to $3,361. Leasing costs have jumped more than 18 percent since the end of the recession in June 2009.
“We’re reaching the point where things can’t go up as much,” Miller said in an interview. “The economics don’t make much sense anymore.”
New York’s improving job market since the end of the recession is luring people to Manhattan. The newcomers have competed for housing in a market already crowded with would-be homebuyers who are lingering in their apartments because the cost of purchasing has become increasingly out of reach. New York City added 94,000 private-sector jobs in the 12 months through October, according to the state Labor Department.
“The conditions that are driving rents higher haven’t changed,” Miller said. “What’s changed is the acceptance of it, the affordability of it.”
Landlord Concessions
The number of newly signed leases climbed 7.7 percent in November to 3,082, Miller Samuel and Douglas Elliman said. Fourteen percent of those deals came with some kind of sweetener, such as a month’s free rent or the landlord’s payment of the broker fee -- the biggest share since March 2011. Last November, only 4.8 percent of new leases came with concessions.
Manhattan landlords are facing increased competition from new luxury towers in Brooklyn and Queens that offer similar amenities, such as doormen and fitness centers, at a lower price. In Brooklyn, the number of new leases jumped 10 percent last month to 640, the firms said. The median rent was $2,935, down 0.4 percent from a year earlier, according to the report, which measures the neighborhoods in the north, northwest and eastern parts of the borough.
In northwest Queens, including the neighborhoods of Long Island Island City and Astoria, new rental agreements surged 95 percent, while the median monthly price climbed 8.3 percent to $2,735.
Less Luxurious
Manhattan renters are seeking smaller, less luxurious units. That’s pushing up prices for apartments in buildings without doormen more than in buildings that have lobby attendants. The median rent for a unit in a non-doorman building climbed 3 percent last month from a year earlier to $2,727, while the median for buildings with doormen rose only 0.4 percent to $3,836, Miller Samuel and Douglas Elliman said.
The luxury-apartment market, the top 10 percent of all rentals by price, was the only category with a decline in prices. The median rent in November fell 1.4 percent to $8,537.
“Complaining about high rents in Manhattan is nothing new, but now it’s becoming more visceral to tenants,” said Miller, who’s been tracking the apartment market since 1991. “We’re hitting the point where affordability is really becoming a much bigger issue than it has been in the past.”