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Manhattan Apartment Rentals Surge as Local Employment Improves

Manhattan Apartment Rentals Surge
An apartment building stands on Lexington Avenue in New York. Photographer: Daniel Acker/Bloomberg

July 8 (Bloomberg) -- Manhattan apartment rentals more than doubled in the second quarter from a year earlier as the city’s job market improved and tenants gained confidence.

The number of leases signed surged to 5,659 in the quarter ended June 30th, according to a report today by appraiser Miller Samuel Inc. and property broker Prudential Douglas Elliman Real Estate.

“I don’t want to characterize that things are booming, that things are fantastic, because it’s not like that,” Miller Samuel President Jonathan Miller said in a telephone interview. “I don’t know if it’s sustainable.”

New York City’s unemployment rate fell to a seasonally adjusted 9.6 percent in May, the fifth consecutive monthly decline, the state Labor Department said June 17. The city’s finance industry added 6,800 jobs from the end of February through May, the largest three-month increase since 2008.

Across the U.S., quarterly apartment vacancies dropped for the first time in two years, falling to 7.8 percent from a 30-year high in the first three months of the year, New York-based property research firm Reis Inc. said in a separate report today.

The median Manhattan apartment rent fell 3.2 percent from the year-earlier quarter to $3,000, according to Miller Samuel and Prudential.

“Part of it is a release of pent-up demand from the abnormally low level of activity last year,” Miller said.

His figures don’t include landlord concessions such as a free month’s rent or building managers paying brokers for finding tenants. New York renters pay that cost themselves when demand is stronger.

Disappearing Sweeteners

Such enticements are declining, according to a separate report today by broker CitiHabitats Inc. Landlords sweetened CitiHabitats deals in 28 percent of the company’s June transactions, down from 47 percent in January, the broker said.

“If you’re expecting to negotiate rent, or you’re expecting to get free rent, you’re going to have to recalibrate your expectations,” CitiHabitats President Gary Malin said in a telephone interview.

Alain Edery didn’t have much to recalibrate. Returning from a year in Israel, Edery, 35, wasn’t expecting a deal. He rented a one-bedroom with his wife and 2-year-old daughter near Union Square in June, paying the asking rent of $3,000 without negotiating, he said.

“I said I want it, and I got it,” Edery said.

Discounts off the advertised asking rents averaged 1.8 percent in the most recent three months, the lowest since the third quarter of 2006, Miller said. A year ago, the discount averaged 9.5 percent.

Listings Decline

The number of apartments listed declined 32 percent to 4,972, according to Miller Samuel and Prudential.

Studio and one-bedroom renters led the overall increase in signed leases. The median rent for a Manhattan studio climbed 5 percent in the second quarter from a year earlier to $2,100 a month. One-bedroom apartments rose 7.3 percent to a median rent of $3,000. Two-bedrooms declined 1.1 percent to $4,499 and three-bedrooms fell 13 percent to $6,698.

CitiHabitats’ report also suggested that renters of smaller units drove the market, with average prices for studios climbing 2.6 percent to $1,811 a month. The average price for three-bedroom apartments fell 3.4 percent to $4,478. CitiHabitats doesn’t calculate median prices.

The broker estimated the vacancy rate at less than 1 percent on June 30th, compared with 1.88 percent a year earlier.

CitiHabitats based its report on more than 6,500 rental deals the company handled in the second quarter. Miller Samuel and Prudential culled information from 5,659 leases recorded by the Real Estate Board of New York and other sources, Miller said.

To contact the reporter on this story: Oshrat Carmiel in New York at ocarmiel1@bloomberg.net.

To contact the editor responsible for this story: Kara Wetzel at kwetzel@bloomberg.net

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