- Median of $2,826 a month is down 0.8% from a year earlier
- Building boom gives renters more choices, negotiating power
An apartment-construction boom in Brooklyn is putting a cap on rents in the New York borough as a surge of new units erodes landlords’ pricing power.
The median monthly rent declined last month for the first time this year, dropping 0.8 percent from last July to $2,826, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The number of apartment listings jumped 30 percent to 2,424, the most units available for any month in records dating back to November 2008.
“The inventory has been rising pretty steadily, but I think it’s now getting to the point where the overall rent numbers are softening,” said Jonathan Miller, president of New York-based Miller Samuel. “It’s a tremendous amount of new product entering the market, and it’s skewed to the high end.”
The flood of choices is encouraging Brooklyn renters to shop around for the best deal in a market where rents climbed as high as 41 percent from their low point in April 2009, data from Miller Samuel and Douglas Elliman show. The number of new leases signed last month jumped 27 percent from a year earlier to 1,321, a sign that tenants found better options by moving rather than renewing an existing agreement, Miller said.
Rents in Brooklyn, once seen as a refuge from Manhattan’s high costs, reached their peak in August 2015, at a median of $2,950.
“That was a saturation point -– an affordability threshold beyond which there was resistance,” Miller said. “Many tenants began to make other plans.”
Throughout Brooklyn, 6,635 newly built apartments are expected to reach the rental market through the end of this year, with more than half that total still not listed, according to data from brokerage Citi Habitats. An additional 7,642 new units are expected to be available for lease next year.
Brooklyn landlords had to offer more concessions last month to persuade tenants to sign a deal. Sweeteners such as a month of free rent or payment of broker’s fees were given on 9.5 percent of all new leases, compared with 5.6 percent in July 2015, according to Miller Samuel and Douglas Elliman.
Rents fell for apartments of almost every size, with studios dropping 8.9 percent to a median of $2,181, and one-bedroom costs down 0.7 percent to $2,700, the firms said. Two-bedroom units commanded a median of $3,074, a 2.9 percent decline.
The median rent for apartments in new Brooklyn developments rose 4.2 percent to $3,421.
The effect of the borough’s construction boom is just being felt now because a lot of new buildings, such as the Gotham Organization’s Ashland tower in Fort Greene, only started leasing last month, said Emilio Martinez, Douglas Elliman’s rental coordinator in Brooklyn.
“There’s just a lot more competition,” he said. “It’s going to put pressure all across the board.”
In Manhattan, landlords contending with a swell of new competition also had to work harder to fill their units in July, a peak month for leasing demand. Concessions were offered on almost 11 percent of all new leases, compared with 5.3 percent last year, according to Miller Samuel and Douglas Elliman.
It was still an uphill climb. There were 7,681 rentals on the market at the end of July, the most for a single month since April 2009, during the recession, Miller said. The vacancy rate rose to 2.49 percent, the highest for July in more than nine years of record-keeping. The median rent in Manhattan was $3,450, up 0.9 percent from July 2015.
In northwest Queens -- the neighborhoods of Long Island City, Astoria, Sunnyside and Woodside, which also have had a surge of luxury construction -- rents slid 8.2 percent to a median of $2,768. Smaller apartments made up a greater share of leases, according to Miller.