Manhattan landlords are doubling down on perks that encourage new
tenants to sign leases and current residents to renew theirs.
Concessions like one month of free rent more than doubled from a
year ago in April to the second highest on record, to 28.6% of
all new leases, a report released Thursday by Douglas Elliman
real estate showed.
However, at the same time, the median rental price including
concessions — so-called net effective rent — fell by 1.8% to
“It may be a sign that we’re sort of at this point where
concessions are working, but they can only do so much,” said
Jonathan Miller, CEO of the real-estate appraiser Miller Samuel.
“The face rents themselves are going to have to actually fall and
we’re seeing a little bit of that now.”
In other words, one month of free rent is only so enticing
when the cost for the other months is still a budget stretch. And
if rents continue to fall, it would probably be better for
tenants to sign up for one-year leases instead of two years
or more, Miller said.
The price drop is also happening at the luxury end of
the market, where oversupply has given buyers more choices. The
median rental price in this segment fell by 6.3% year-on-year to
“The ‘soft at the top’ narrative continues, Miller said. “Judging
by the high use of concessions across these markets, and with a
lot of product still entering the market through the year, I
don’t see this picture changing in 2017.”
One exception to the trend of falling rents in April was in
Manhattan apartments in buildings without the perk of a doorman.
The median rent jumped by 5.8% to $2,995, the highest in nearly