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In Major Reversal, Apartment Vacancies Rise
In major reversal, apartment vacancies rise
August vacancies in Manhattan rentals hit 1.1% after eight months of declines; higher rents and lower landlord concessions blamed.
For the first time in eight months, the August vacancy rate rose in Manhattan residential buildings rose, hitting 1.1% in what proved to be an unusually slow month, according to latest data by CitiHabitats. That figure is up from 0.88% in July.
The monthly increase marks a major reversal in the local residential rental market, which has been strengthening for nearly a year. The vacancy rate has been declining every month since November. In July, it reached its lowest point in nearly three years, said CitiHabitats.
“I was surprised to see the vacancy rate jump above 1% in August, which is typically a busy month,” said Gary Malin, president of CitiHabitats, the city's largest residential rental brokerage. He attributed the increase to rising rents and landlords withdrawing rental concessions. Landlords are less flexible than they were a few months ago, he noted.
An improving city economy also helped keep the vacancy rate down earlier in the year. “There were also a lot of new hires that started early this year, in June and July,” said Gus Waite, a managing director at residential brokerage Bond New York, so a lot of people were buying earlier in the summer. In addition, new construction on the far West Side added more inventory to the rental market, he said.
In August, a mere 20% of apartments rented by CitiHabitats included concessions—typically giving a free month's rent or paying the broker's fee. That is drastically down from the peak of incentives in December 2009 when roughly 60% of apartments rented by the brokerage included concessions.
“When people hear that a sale is going to end soon they try to get in the store early,” said Mr. Malin, noting that people most likely started their search for a new apartment early in the year—hence the drop-off in rental activity last month. Vacancy rates tend to increase in the fall months and steadily increase throughout the winter until January, he said.
Mr. Malin predicts a continued slow down in activity this month due to the Labor Day weekend, the anniversary of the 9/11 attack and the Jewish holidays. This is the first time since April that the vacancy rate has been higher than 1%.
Despite vacancy rate jump last month, Mr. Malin insists that his brokers were busy, reporting that CitiHabitats completed 1,400 rental transactions in August. He also points out that New York rental market is still faring better than the rest of the nation, where the vacancy rate hovers between 7% and 9%.