A flood of new apartments in Manhattan are finally starting to take their toll on a subsection of NYC real estate that had remained quite resilient up until now. As Bloomberg points out this morning, with rent concessions now being offered on 35% of high-end apartments in the Big Apple, the median rent for non-doormen buildings fell in October for the first time in 20 months.
The median rent in buildings without doormen fell 1.9 percent in October from a year earlier to $2,840. It was the first decline for the category in 20 months, and the biggest since February 2014, according to a report Thursday by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.
It’s not that tenants were more willing to pay up for pools and yoga rooms. But landlord concessions at some of these fancier buildings -- such as rent-free months and complimentary access to gyms -- have made the properties a compelling, if slightly costlier, option.
“A lot of these doormen buildings have a lot of vacancies and they are offering quite a bit of incentives,” said Hal Gavzie, who oversees leasing for Douglas Elliman. “Rental customers are looking for the best deal they can get.”
At buildings with doormen, concessions were offered on 35 percent of all new leases signed in October, the second-highest share this year, according to Jonathan Miller, president of Miller Samuel. At non-doorman properties, 20 percent of deals included incentives.
“If you’re looking at two apartments,” Miller said, “and one is in a full-service building and one isn’t, and the difference in rent is a hundred bucks after concessions, maybe you go to the doorman building.”
Meanwhile, increasing rent declines come as the purchase market also seemingly softened in Q3 2017 with Douglas Elliman noting an 11.5% plunge in average purchase price per square foot and listing discounts that nearly doubled YoY.
Of course, as we've noted frequently over the past couple of quarters/years, it seems that the inevitable negative consequences of the massive overbuild of new developments in Manhattan are finally starting to take their toll with average new build prices down 27% YoY and 18.3% on a per square foot basis.
Perhaps the efforts of Jimmy McMillan are finally starting to pay off?