Rental activity in Manhattan, together with Brooklyn and Queens, continued to fall in May, according to an appraisal firm.
Manhattan is facing more difficulties as the aftermath of the coronavirus pandemic continues to unfold, leaving the city’s leasing activity paralyzed and unable to rally from April’s slump.
In a recent report published by real estate appraisal firms Douglas Elliman and Miller Samuel, Manhattan’s new leases plunged by 62%. The drop, according to the study, is mostly due to residents fleeing from the hard-hit city of New York, followed by on pause real estate activities.
Manhattan rental vacancy hit an all-time low
Manhattan, with a 62% decline, recorded the lowest number of new leases for the month of May in ten years. The city’s year-over-year new rental is the second-biggest drop in a decade as well, topped by April’s slump of 71%.
Although the month of May has recorded another highest decline, last month’s slump is not as bad as April’s. The author of the Douglas Elliman report, Jonathan Miller, explained that the tiny upward trend is possibly due to people slowly adapting the “new normal.”
“I think we are moving from the stunned-and-paralyzed mode to the thinking-about-the-future mode,” he said.
The city has recorded more empty apartments in May as well, with a 1.23% vacancy rate, compared to any month since the two appraisal firms began to collect real estate data in 2006.
Moreover, Manhattan’s listing inventory (number of apartments for rent) has also seen an upward trend with an annual high of 34% to 7, 240. The increase is also the highest jump in forty-five months, based on the report.
Landlords offer more rental concessions
Despite the high vacancy rate, rents in Manhattan remained unmoved. Its median rental price in May stayed at $3, 415, a few dollars higher than last year’s US$3,413[AU$5,018]. The same situation goes with Brooklyn rents as well (from $2, 829 to $2, 921), which is 3.3% higher last month compared to 2019.
On a good note, landlords are giving more rental concessions than before.
In Manhattan, for instance, 42% of apartment owners had made rental concessions that are equivalent to 1.5 months. The rate is also higher compared to last year’s 34%.
The number of landlords in Queens who offered up rental concessions, on the one hand, skyrocketed to 65%, giving at least 1.8 free months of rent. Brooklyn recorded 33% of discounted deals as well.
Low new leases may push rental fees down
While it is too early to conclude about Manhattan’s real estate future, new data suggests that rents in the said city might fall. In a report, UrbanDigs noted that the number of vacant apartments shows that renters have the “upper hand in negotiability.”
Miller, although he mentioned that the May rent in said cities is lower than April’s, said it is “too soon” to see massive fall rental fees. Instead, last month’s situation indicates that the real estate industry is “taking a step back.”
“We’re largely in a holding pattern, but that’s coming to an end pretty quickly,” Miller shared.