Manhattan Apartment Market Tightens as Leasing Triples, Concessions Fall
The Manhattan apartment market tightened in the fourth quarter, as the number of leases almost tripled and landlords cut concessions to renters.
New leases rose to 7,217 from 2,456 a year earlier, according to a report today by appraiser Miller Samuel Inc. and property broker Prudential Douglas Elliman Real Estate. The inventory of listings shrank 26 percent to 3,862 units and the time on market fell 42 percent to an average of 44 days.
“We went from the pendulum being significantly in favor of the tenant to perhaps more of a balance,” said Jonathan Miller, president of New York-based Miller Samuel. “Now we’re more in the middle and that’s measured by concessions, which aren’t gone. They’re reduced and more consistent with historical use.”
Median rents increased 1.7 percent from a year earlier to $2,950 and annual rent per square foot rose 4.5 percent to $49.13, Miller Samuel reported. A report yesterday by Citi Habitats said Manhattan’s average rent in the fourth quarter rose 5.9 percent to $3,127.
About 41 percent of leases during the quarter included a concession, saving those renters the equivalent of one month’s rent, Miller Samuel reported. A year earlier, concessions usually equaled two or three months of rent and were offered to a bigger share of new tenants, Miller said.
“Rents are stable based on what’s on the lease,” Miller said. “But concessions compared with the market a year ago have largely gone away.”
Economy Picks Up
Landlords gained leverage as New York City’s economy rebounded from the plunge triggered by the September 2008 bankruptcy of Lehman Brothers Holdings Inc., Miller said. The unemployment rate fell to 9.1 percent in November, the lowest since April 2009. Private-sector employment rose 1.6 percent in the 12 months to about 3.2 million, with financial-services jobs rising by 5,900, according to the New York State Department of Labor.
Glenwood Management Corp. stopped offering rent concessions in March, said Gary Jacob, executive vice president of the New Hyde Park, New York-based company, which owns 25 Manhattan apartment buildings.
“In 2009, there was a lot of negotiating,” Jacob said. “That’s not happening now.”
Rents on the West Side saw the steepest increase per square foot, rising 12 percent to an average $55.31, Miller Samuel reported. Rents in the downtown area south of 42nd Street rose 5.3 percent a square foot to $49.86, while rents on the East Side, between 42nd and 96th streets, fell 6.4 percent to $44.94.
Attraction of Amenities
The West Side also has more new apartment buildings, which command higher rents because tenants want amenities such as fitness centers, Miller said. Emerald Green, Glenwood’s 569-unit, two- tower development that opened in late 2009 at 320 W. 38th St., is asking higher rents to new tenants attracted by a gym, pool and children’s playroom, Jacob said.
About 2,500 to 3,000 new apartments are scheduled to open this year, said Clifford Finn, managing director of the new development market at Citi Habitats. The biggest is New York by Gehry, a 902-unit, 76-floor tower designed by architect Frank Gehry at 8 Spruce St. near City Hall, set to open in February, Finn said. The building was previously called Beekman Tower. Prices for the apartments have not been announced.
Glenwood started construction last month of Crystal Green, a 200-unit tower at 330 W. 39th, which it expects to open in mid-2012, Jacob said.
Tax Exemptions End
The pipeline of new apartments is shrinking because few projects have been started since the Lehman bankruptcy and others were put on hold after the state’s 421a program, which offers tax exemptions for multifamily residential projects, expired at the end of last year, Jacob said.
“As employment increases, rents are going to go up, unless there’s new construction,” Jacob said.
Greg Wood, who sells orthopedic devices for Stryker Corp., said Glenwood offered no concessions when he signed a lease on Jan. 7 for a one-bedroom apartment in the Stratford at 1385 York Ave. He liked the building for its amenities, including an apartment balcony and a rooftop pool, which costs an extra $400 a year to use.
“The negotiating process was basically them saying, ‘This is what it is,’ ” said Wood, who agreed to pay $2,800 a month for the 650-square-foot apartment using a broker from Citi Habitats. “I think they’ve kind of got you.”
Wood, 35, said buying isn’t a good option for him because owning a similar one-bedroom apartment would cost $4,000 to $5,000 a month. Wood, who moved to Manhattan five years ago after selling a Connecticut home, said he probably couldn’t resell or lease out a Manhattan apartment without losing money, if he had to move for a job or to form a family.
The median sale price of Manhattan condos and coops in the fourth quarter rose 4.3 percent from a year earlier to $845,000, Miller Samuel reported Jan. 4.
“Buying is almost like gambling,” Wood said in a telephone interview. “I did it before, but I’m not ready to do it now.”
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