Improving economy, construction lag means fewer vacancies, higher Manhattan rents
A year or so ago, people looking to rent apartments could count on some negotiating, maybe even the offer of a free month of rent if they were lucky. Now, forget it: With a sag in construction this year compared to last, and a market beginning to recover from the recession, property owners are once again setting the terms of the deal — and letting ravenous renters compete for the few spaces available.
The effects, as always, ripple out from Manhattan. An extraordinary surge in unit construction in 2010 boosted supply on the island; contractors finished nearly 5,000 units. This year, that number is expected to fall to about 1,200, according to California-based real estate investment services firm Marcus & Millichap’s 2011 National Apartment Report. The firm expects vacancy rates to plummet in Brooklyn and Queens as Manhattan units fill and demand increases for more affordable apartments.
Landlords already are jacking up the rents in Manhattan. Average rents were up across the board in the first quarter of 2011 compared to the same period in 2010, according to CitiHabitats, the apartment brokerage firm on Park Avenue, which does quarterly rental market reports for the island.
Some more sobering findings from the brokerage’s first-quarter report:
- Rents increased by 8 to 12 percent, with three-bedroom apartments showing the highest increase.
- The overall Manhattan vacancy rate dropped to 1.08 percent in 1Q 2011, compared to 1.45 percent in 1Q 2010.
- The vacancy rate for March fell to 0.99 percent, compared to 1.18 percent in February.
- The neighborhood with the lowest vacancy rate: the West Village, at 0.57 percent.
- In 1Q 2010, 44 percent of the brokerage’s rental transactions included some kind of owner-paid concession, usually a month’s free rent or payment of the broker’s fee. A year later, that number fell to 17 percent — and to 14 percent in March.
Gotham Brokerage has operated in the five boroughs for a half-century and we know all the potential pitfalls and shortcuts of insurance in the Tri-State area. Whether you’re thinking of renting a luxury apartment Uptown or a more affordable offering in Flushing, we can help guide you to the right policy. Call or e-mail us and request a quote today.