Manhattan’s apartment vacancy rate rose in August to its highest level for the month in three years as record-setting rents pushed tenants out of the market in the busiest time for leasing, according to Citi Habitats.
The vacancy rate in August, when the greatest number of Manhattan leases are signed, was 1.19 percent, up from 1 percent a year earlier, the brokerage said in a report today. The rate was 0.88 percent in August 2010 and 1.62 percent in 2009.
The uptick signals that tenants are staying on the sidelines after average apartment rents reached a record in March and continued to climb each month, Gary Malin, president of Citi Habitats, said in an interview. A rise in vacancies before the slowest months for rentals may limit the surge in rates and make landlords more flexible on lease terms, he said.
“As they head into the winter months, the last thing they want to do is rack up vacancies,” Malin said. “So if they have to modify their prices or if they have to offer incentives they’ll do so.”
Apartment rents have surged in the past year as a stagnant sales market spurred demand for leasing. Rents averaged $3,461 in August, the highest since Citi Habitats began tracking the data in 2002. Lease prices are 2 percent higher than the 2007 peak of $3,394, the brokerage said.
Stricter mortgage-lending standards and weak consumer confidence are still limiting home purchases, creating enough competition for rentals to keep lease rates rising in the coming year, said Jonathan Miller, president of New York appraisal firm Miller Samuel Inc. Purchases of condos and co-ops were little changed in the second quarter compared with a year earlier, while the median price fell 2.5 percent, according to a report from Miller Samuel and Prudential Douglas Elliman Real Estate.
“Statistically, I don’t see it as a defining moment,” Miller said of the August vacancy rate. “I would expect the pace of rental growth to ease over the next year, but still expand.”
Any price decreases or landlord concessions in the coming months will be moderate, Malin said.
“I don’t think you’re going to see any massive price depreciation,” he said.
Rents for studios climbed 1 percent in August from a month earlier to $2,092, while one-bedrooms declined by one percent to $2,785, Citi Habitats said.
Two-bedroom units rose 1 percent from July to $4,032 on average, while rates for three-bedroom apartment prices remained little changed at $5,320.
The Upper East Side neighborhood had the highest vacancy rate at 1.6 percent, the brokerage said. The Upper West Side had vacancies of 1.38 percent. The lowest vacancy rate was in the Gramercy area, at 0.76 percent.