Landlords offer record freebies to New York City apartment hunters in 'challenging year'
- Landlords in New York City offered concessions like a month of free rent to lease a record share of apartments last month, according to the real-estate appraiser Miller Samuel.
- Apartment hunters are getting these perks amid a deluge of new rental properties on the market, especially at the high end.
"That will continue in 2018 and exacerbate the softness at the top," said Jonathan Miller, the CEO of Miller Samuel.
Apartment hunters in New York City can continue to expect offers of free rent and other freebies this year, according to the real-estate appraiser Miller Samuel.
In December, landlords offered concessions, used to speed up lease signings, on a record 36.2% of apartments on the market, according to a report Thursday co-prepared with Douglas Elliman Real Estate. The market share of concessions hit new highs in Manhattan, Queens, and Brooklyn - the three boroughs under coverage.
"2017 was a challenging year for landlords," said Jonathan Miller, the CEO of Miller Samuel.
Samuel attributed this to a barrage of new, higher-priced units that landlords want to fill soon after they're ready.
"There's nothing apparent that is going to change the narrative that a lot of new product is entering the market," Samuel told Business Insider. "That will continue in 2018 and exacerbate the softness at the top."
The freebies appear to be effective, but with mixed results that partly depend on the number of new apartments, Miller said. The number of new leases signed in Manhattan jumped 48% last month compared to the same period in 2016. At the same time, the median net effective rent, which factors in concessions like a month of free rent, fell by 2.5% year-on-year to $3,291.
This was due to an influx of units, especially in the higher end of the market, Miller said. But in Queens, where new supply wasn't as strong, the number of first-time leases fell year-on-year by 29%.
Investors looking for higher returns in a low-interest-rate world helped drive New York's apartment boom after the recession, Miller added.
But that's not solving an affordability problem in the cheaper end of the market, which is less profitable to invest in. And for many people, a month of free rent isn't a good deal beyond a certain price point.
"Because modest-priced apartments are in short supply, you're going to continue to see tenants scramble for greater affordability by moving further away from wherever they work, or moving to the suburbs," Miller said.