One of the big questions the coronavirus pandemic has raised in New York is whether the Manhattan rental market can ever fully recover. Eight months in, there may be some light at the end of the tunnel.
The number of new leases signed in Manhattan increased in October for the first time since July, according to The Elliman Report, which tracks the New York housing market. In all, 5,641 new leases were signed in the borough, 12 percent more than were signed in September, and 33 percent more than last September. This sounds good. Is Manhattan back?
Jonathan Miller, of the appraisal company Miller Samuel and author of the report, said that while the number of new leases is considerably higher than last year, “at the same time, there’s a whole suite of other metrics that are very negative, which makes the new leasing activity really stand out.”
Among those is October’s record vacancy rate, which was 6.14 percent (representing 16,145 available units) — the highest in 14 years. This has driven landlords to lower rents and offer concessions like months of free rent — tactics that finally seem to be working.
“The drop of rental prices is starting to pull people in,” Mr. Miller said. “It passed some kind of inflection point.”
In fact, the median rent for new Manhattan leases in October fell more than 11 percent from last October, from $3,500 to $3,100. And a record 60 percent of new leases included financial concessions, up from 37 percent from a year ago. The average concession equaled 2.1 months of rent — another record, up from 1.2 months a year ago — and the median rent for units with concessions was $2,868, the lowest level in over nine years.
So while new lease signings, lower rents and more concessions are good for renters, the circumstances driving them are not likely to recede quickly. “I think that there is not going to be much change in the near-term, if we look at everything but new leases,” said Mr. Miller. “Concessions aren’t going away.”
This week’s chart, drawn from the Elliman Report, lays out how leases, rent prices and concessions have changed over time for Manhattan apartments of various sizes.