Landlords in New York City are taking unprecedented steps to get leases signed.
In January, concessions like a month of free rent and brand new appliances rose to a record in Manhattan and Brooklyn, according to the real-estate appraiser Douglas Elliman. Concessions hit new highs for a fourth straight month, and the share of new leases with such giveaways was above 30% for the first time.
Concessions climbed to a record 18.1% of all leases in Brooklyn, more than triple a year ago.
“It’s one thing to give concessions because it’s a new building and amenities aren’t working yet or the building’s not fully completed,” Andrew Barrocas, the CEO of brokerage MNS, recently told Business Insider.
“And then there’s concessions because you can’t rent at that price.”
It appears to be the latter in New York, as landlords adjust prices to be more in line with what prospective tenants are willing to pay. The heaviest concessions were in the market for two-bedroom apartments, according to Douglas Elliman’s monthly report.
The median net effective rent — which factors in concessions — slipped year-over-year by just 0.1% to $3,369, while the number of new leases signed dropped 5% to about $3,200. Both the number of days on the market and listing inventory were higher, suggesting that landlords had a harder time filling up vacant apartments.
“Overall there’s definitely signs of the rental market weakening,” Barrocas said. The market slowed down, he added, amid disagreement over New York State’s 421-a tax exemption for developers that would normally encourage the construction of affordable housing.