City’s Residential Market Shows Continuing Signs of Softening
In its report on the three boroughs for the month of August, the brokerage firm says that concessions remain a key part of leasing strategy in Manhattan and Brooklyn and to a lesser degree in Queens.
NEW YORK CITY—The city’s residential market continues to show tangible signs of softening across Manhattan, Brooklyn and Queens, according to a report released today by brokerage firm Douglas Elliman Real Estate.
In its report on the three boroughs for the month of August, the brokerage firm says that concessions remain a key part of leasing strategy in Manhattan and Brooklyn and to a lesser degree in Queens.
“In Manhattan, prices are trending downwards and concessions have increased year-over-year for 39 months,” says Hal Gavzie, executive manager of leasing for Douglas Elliman Real Estate. “As a result, vacancies are at their lowest level in more than four years.” The largest decline in rent was seen in the Manhattan luxury segment of the market. The median rental price for luxury units fell 3.8% from August 2017 and stood at $7,700 at the end of August 2018.
Some of the key metrics in Manhattan in August include the median rental price slipping 1.2% in August year-over-year to $3,400. The only market segment to see an increase in median rent was studios, which saw a 1.9% hike in median rent to $2,650 in August 2018. Three-bedroom-apartments saw the deepest decline in price, falling 8.5% year-over-year to $4,963.
The market share of concessions (34.7%) expanded year over year for the 39th consecutive month in Manhattan, Douglas Elliman states. Listing inventory declined 7.2% to 5,611 units and the overall vacancy rate in Manhattan fell from 2.27% in August 2017 to 1.58% at the end of last month.
In Brooklyn, the amount of new development entering the marketplace skewed the aggregate rental pricing to seemingly higher levels, although net-effective rents continued to slip, the report concludes. “Last month, this trend of higher-priced new inventory created the false narrative of rising prices, while, at the same time, rents at older properties slipped,” says Jonathan Miller, president and CEO of Miller Samuel Inc. and the author of the report.
The overall median rental price in Brooklyn rose 1.7% in the 12-month period to $2,950. The median rental price for units in new developments stood at $3,200 at the end of August, while the median rental price for luxury multifamily properties stood at $5,770.
Concessions expanded in Brooklyn, while in Queens the number of concessions declined for the second month in a row after 16 months of year-over-year increases, according to the report.
While the the average pricing for Queens rentals rose 4.8% in the past year to $2,995, Douglas Elliman states this trend was reflective with what was seen in Brooklyn with the large increase of new, more expensive development there distorting the actual rental pricing.
“I see the change in the Queens market as a sign that landlords are getting better at initial pricing rather than seeing this as a sign the prices are actually rising,” Miller says.
Some other key data points in the Queens residential market in August included a large surge in one-bedroom new leases as all price trend indicators posted large gains; the size of concession was 1.1 months, which was down from 1.2 months a year earlier; the number of new leases increased 9.8% to 391 at the end of August and listing inventory declined 19.6% to 422 units.