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Manhattan Vacancy Rate Up

08/09/2012, By Tania Karas


Manhattan Vacancy Rate Up


The vacancy rate for Manhattan apartments crept up for the second consecutive month in July, good news for those searching for a new living space. But the accompanying bad news should come as no surprise: average rental rates are at record highs, with no signs of coming down soon.

A report by real-estate firm Citi Habitats shows that Manhattan's inventory increased to 1.2% in July, the highest level since March. In the year-earlier month, the Manhattan vacancy rate was 0.86%.

The latest figure is an unusually high rate for the summer months, traditionally the busiest season for renters on the move, and means apartment seekers have more units to choose from.

But Citi Habitats President Gary Malin said this summer is still a clear "landlord market." The average Manhattan apartment rented for $3,459 in July, an increase of $16 over the previous $3,443 record set in May.

In addition, fewer than 5% of landlords are offering a free month's rent or paying brokers' fees—the kind of incentives that were far more common for renters at the height of the recession.

"We've never been busier than right now," Mr. Malin said. "Demand is still very strong. Prices are getting higher, and incentives for renters have dwindled and gone away."

Douglas Wagner, executive director of leasing for real-estate firm Bond New York, said July through September are the months New Yorkers are likeliest to move, making the 1.2% vacancy rate not far off the mark from what's typical for July.

"I'm not surprised," Mr. Wagner said. "It's a seasonal opening of inventory. If you take a look at the numbers in October, they'll be tighter again."

Mr. Malin attributed the higher vacancy rate to people delaying their move-in dates to save money in a time of increasing rental prices.

People often "will move in a month or two before they start a new job so they can enjoy New York and get set up in a new environment," he said. "This summer they're waiting to move in until they absolutely have to."

That is adding to a rush for housing in the last few weeks of summer, Mr. Malin said, and the Manhattan vacancy rate will likely drop in August due to pent-up demand. This will push some out of Manhattan and into cheaper apartments in other boroughs.

He said that will help create demand in Brooklyn and Queens and spur new housing development there. "It's better for everyone in the long run," Mr. Malin said. "But the truth is, we need more housing."

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