Luxury buyers 'glamping out' in NYC's high-end rental market, driving up rents
Reluctant buyers, especially those who might fork out for luxury apartments are instead seeking out high-end rentals and that’s a big driver of higher rents seen in November.
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New Yorkers are seeing rents going up and up with fewer concessions being offered—those sweeteners like a month’s free rent or no broker fee. That’s because reluctant buyers continue to crowd into the rental market, making it harder to find a well-priced apartment.
Net effective median rental prices, that’s rent with concessions, have risen in Manhattan throughout the year, reaching the highest level in a decade in November, and the second-highest level ever recorded, according to Douglas Elliman’s November rental market report for Manhattan, Brooklyn, and Queens. The median rent for Manhattan also rose; it was up 8.5 percent last month to $3,600.
Reluctant buyers, especially those who might fork out for luxury apartments are instead seeking out high-end rentals and that’s a big driver of higher rents seen in November. Jonathan Miller, president and CEO of appraisal firm Miller Samuel and author of the report, calls this “glamping out” in the market, where would-be buyers opt for high-end rentals instead, making that market more competitive.
“Rents are rising even faster, due in part to price growth at the high end, which is largely a product of the softer sales conditions in the luxury market,” says Hal Gavzie, executive manager of leasing for Douglas Elliman.
With so much demand for apartments, landlords no longer see good reasons to offer concessions. Renter freebies fell for the eighth straight month, and the number of new leases was down, significantly in Manhattan, where they fell 13.5 percent and Queens, where they were down 14.3 percent. Where concessions were offered, they were highest in Brooklyn at 1.4 months rent-free or equivalent, down from 1.5 months this time last year. Shares of new Brooklyn leases with concessions was 39.8 percent, down from 46.5 percent.
In Brooklyn, the median rent was $2,950, up 3.5 percent. That's slightly lower than the median rent in Queens, $2,989, which reflects an increase of 4.2 percent.
Earlier in the year rents in Queens bucked trends seen in Brooklyn and Manhattan but in the past two months, median rental prices in the borough have risen. This month’s rent increase in Queens was most significant for large apartments—where the median rental price for a three-bedroom was $4,600, up nearly 13 percent year on year.
Miller, says the numbers come as no surprise. “We haven’t seen a rental price drop or an increase in concessions in several months, and it’s certainly looking like the market will finish out the year with that same resilience,” he says.
Other market reports
For those in search of move-in incentives, Citi Habitats' rental market analysis for November finds landlords in Brooklyn are more likely to offer concessions. “With Manhattan rents pushed just about as high as they can go, Brooklyn neighborhoods—even those off the beaten path—are proving to be increasingly appealing to many,” says Gary Malin, president of Citi Habitats.
Washington Heights and Bedford-Stuyvesant are currently the least-expensive neighborhoods in Manhattan and Brooklyn with median rents at $2,110 and $2,655 respectively, according to Citi Habitats.
MNS also has rental market reports for Manhattan, Brooklyn, Queens and the Bronx. Manhattan rents are up year on year for one- and two-bedroom apartments in doorman and non-doorman buildings. The only decline was for studios in non-doorman buildings which have seen a price reduction of 2.8 percent year on year from $2,576 to $2,505.
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