New York Luxury Towers Draw Renters to the Outer BoroughsOshrat Carmiel
Apartment leasing in New York’s Brooklyn and Queens boroughs more than doubled last month from a year earlier, as newly built luxury units create competition that may curb Manhattan rents from climbing much further.
There were 441 new lease signings in Brooklyn, up from 209 a year earlier, and monthly rents climbed 9 percent to a median of $2,900, appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate said today in a report. In Northwest Queens, where developers are transforming the skyline with luxury rental towers in Long Island City, new leases rose 121 percent to 137, while rents climbed 5.9 percent to $2,839.
Rents in both markets soared to records last year, while Manhattan’s median rent has yet to top the 2006 peak even with 10 consecutive months of year-over-year gains, said Jonathan Miller, president of Miller Samuel. That’s a sign that new towers in Brooklyn and Queens are luring tenants from the most-expensive borough.
The Manhattan market “is striving to reach a record but it doesn’t appear that there’s a lot more fuel in the tank,” said Miller, a Bloomberg View contributor. “Part of the reason for the weaker conditions is that there’s more competition across the river.”
Manhattan’s median rent in December rose 4.8 percent from a year earlier to $3,250, according to Miller Samuel and Douglas Elliman. For much of last year, the month-over-month rent growth was negative or less than 1 percent, Miller said. The record median rent for a quarter is $3,265, set at the end of 2006.
The Brooklyn report includes the neighborhoods in the north, northwest and eastern parts of the borough. As many as 13,755 new rentals in those areas are being planned or under construction, according to data compiled by Clifford Finn, executive vice president of new developments for Douglas Elliman. More than 20,000 new rentals are in the pipeline in the Queens neighborhoods of Long Island City and Astoria.
These newly built units -- most with amenities such as fitness centers, resident work lounges and washer-dryers in the apartments -- are drawing residents from Manhattan who see a value in high-end features for the same or less money, Finn said.
“The level of luxury in those buildings is steadily increasing and prices are steadily growing and they still have room to grow,” Finn said.
At Pearson Court Square, a 197-unit rental tower in Long Island City that opened last year, amenities include a doorman, a rooftop lounge with panoramic views of Manhattan, a bocce court and on-site Zipcar rentals, according to its website. An estimated one-third of its initial renters came from Manhattan, while another third came from outside New York City, said Finn, who oversaw the leasing of the property.
“The Manhattan market is facing competition that it hasn’t seen,” said Gary Malin, president of brokerage of Citi Habitats, which released its own report today on the Manhattan rental market. “These types of high-rise luxury buildings didn’t exist before in the outer boroughs.”
In Manhattan, 13 percent of newly leased units in December came with a concession from the landlord, such as a month’s free rent or the payment of the tenant’s broker fee, according to Citi Habitats. That compares with 9 percent of all deals a year earlier. The vacancy rate was 1.74 percent, the highest since the previous December, when it was 1.82 percent, Citi Habitats said.
Median monthly rents on larger apartments in Manhattan fell in December, with two-bedrooms declining 8.6 percent to $4,400 and three-bedrooms falling 21 percent to $5,745, according to Miller Samuel and Douglas Elliman. Rates for studios climbed 4 percent to a median of $2,427, while one-bedroom units saw a 4.4 percent increase to $3,291.
Rents in newly developed Manhattan towers fell 7.3 percent to a median of $3,840, the firms said.
The Tribeca and Soho areas had the borough’s highest rents for one-bedroom apartments, at average of $3,850, according to Citi Habitats. Three-bedrooms commanded $9,000, compared with the Manhattanwide average of about $5,000.
While rents may not reach a new peak in the coming year, improving job growth in New York City means they are also unlikely to slide, Miller said.
“Both sides are going to be annoyed,” Miller said. “Landlords want rents to continue to rise and tenants want rents to go down. So no one will be happy.”
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