NYC Landlords Feel The Pain As They Offer Incentives In Record Numbers

Overconstruction means potential tenants can pick and choose where they want to live.

By Jeff Vasishta February 10, 2017

If there’s one thing landlords hate more than throwing in a free month’s rent, it’s a vacant apartment. That’s why record numbers of them in Manhattan and Brooklyn are including giveaways like a free month or the payment of broker fees in order to get leases signed.

The construction boom throughout NYC has resulted in an inevitable deluge of new apartments now on the market. As a result, potential tenants have the luxury of being able to pick and choose where they want to lay their head at night. New York landlords, often perceived as fat cats squeezing tenants dry with demands for upfront payments and multi-year leases when available apartments were scarce, are now having to grovel to get qualified renters to put to paper.

RelatedWhy Owning A Land Lease Building Does Not Have To Be Scary

The portion of new leases signed with concessions reached a new high for the fourth straight month. In January, Bloomberg reported, 31 percent of contracts came with landlord incentives—the biggest share in more than six years of data-keeping by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate.

“They know they have to,” Hal Gavzie, executive director of leasing for Douglas Elliman, told the media organization. “As landlords and owners, they would much rather not do it. But you have tenants and renters who are resisting the price increases, and this is now where things are.”

Incentives, inducements—or plain old bribery—works, apparently. Citi Habitats said that 37 percent of deals the firm brokered in January came with some landlord incentive, the highest share it’s tracked since April 2010. With these in place, Manhattan’s vacancy rate declined to 1.9 percent, the lowest since October, when it was at the same level.

RelatedNew York Rents Keep Rising: If You Own That Brownstone, You May Be Rich

Landlords take a double hit when prospective tenants inform a broker they don’t want to pay their fee. A deal breaker under normal circumstances, landlords are covering the cost. The key in lean times for management companies and landlords is keeping a building full. Nothing sets of a stench like a partially empty building. Tenants aren’t going to advertise what great incentives they received. As far as outsiders are concerned, everyone is paying market rents. Once committed, landlords have tenants locked in for a year or two, by which time the market may change and they can get renters to renew their lease with an increase thrown in. Should, however, the market continue to falter inevitably incentives will only go so far. Rents will drop.

This has already happened in Brooklyn, NYC’s most populous borough, where rents have dropped regardless of the tripling of incentives in January from the year earlier. The median face rent slipped 1.9 percent from last January to $2,750. The decline was 2.8 percent, to $2,702, with concessions factored in. The inventory of available listings in Brooklyn surged 25 percent to 2,459, the firms said.

For once, the rent may not be too damn high.

Jeff Vasishta



Jeff is a writer, husband and father but not necessarily in that order. As a music journalist he counts Prince, Beyonce and Quincy Jones amongst those he’s interviewed. He's also owned and flipped homes in Brooklyn, NJ, CT and PA.

    Avocado toasts are the reason why millennials can’t afford a home, says one Australian real estate developer. #AvocadoToast #Millennials
    Five years on since Superstorm Sandy, Queens’ coastal peninsula is in the midst of a development boom. #Development #Rockaways
    It turns out, renters can’t get enough of good ol’ no-doorman-no-frills apartments. Too bad developers aren’t building any. #Doorman #LuxuryRentals
Millennials Are Fueling The Current Sizzling Real Estate Market
Ever wondered why the hosts of home improvement shows seem to be getting progressively younger, along with the fresh-faced couples getting their new properties made…
The Best Cities For Recent Grads To Rent – Without Blowing Their Entire Paycheck
What’s next post graduation? For most, the logical answer is to find a job. After the excitement of finishing your studies and the big celebration,…
Luxury Knows No Limit In Malaysia As A Deluge Of New Developments Hit The Market
The amount of newly constructed high-end real estate in Malaysia is almost as abundant as the lush vegetation which covers the tropical landscape. Despite vacant…
Don’t Call It A Commune – Upscale Co-Living Is Attracting Major Development
What may have once been referred to as a commune is today termed a co-living space. The big news that it’s not hippies with hemp…
It’s Official—New York Is Now The Most Expensive City In The World To Build
As if you didn’t already know, it’s expensive to build in New York City. Not just expensive but now officially the most expensive place in…
An Ultimate Destination For The Most Comprehensive Real Estate Data, Agorafy Prepares To Launch Nationwide
In the coming days, Agorafy will be entering a new chapter. It is the beginning of a new growth cycle in real estate technology with…
A New Beach Front Condo Building Slated For the Rockaways Amid A Slew Of New Development
Proving that New Yorkers are the masters of reinvention, particularly when it comes to real estate, a new millennial-friendly condo tower is due to rise…
Brokers Brace Themselves For Government’s Visa Clampdown To Hurt Real Estate
New York brokers are blaming the new anti immigration policies for scaring away new potential foreign property owners. Government’s stricter visa protocols means that the…

TOP 10