LATEST NEWS

Rentals and Chill: NYC Rents Cool Down As Inventory Rises

Is it possible the rental boom has peaked? Supply and demand rules the market.

By Jeff Vasishta September 26, 2016

[otw_shortcode_dropcap label=”R” font=”Bowlby One SC” color_class=”otw-black-text” background_color_class=”otw-no-background” size=”large” border_color_class=”otw-no-border-color”][/otw_shortcode_dropcap]enting an apartment in New York City often feels a bit like being on the Titanic—the water keeps rising until you either jump ship or go under. But according to AM New York, renters may have an air bubble to buy a little time.

Taking into account that the colder months usually cause a cooling in the relate estate market, things are easing up for renters even more than usual this fall. The reason? There seems to be a bit of a glut on the market. The New York skyline has become increasingly crowded, with new buildings seemingly sprouting up overnight and the supply, for once, appears to be outpacing the demand.

Related: Your Dreams Are Not For Sale, But Maybe They’re For Rent: Five Frank Lloyd Wright Houses You Can Rent

“Price growth is a little bit slower but also units aren’t getting snapped up quite as quickly, so there’s more of them available” said economist Krishna Rao. “You have a little more breathing room than you would have a year ago.”

The numbers don’t lie. Median Brooklyn rents rose six percent from July 2014 to July 2015. This year the increase is just one and a half percent. In Manhattan it’s a similar story with this year’s rent increasing more than two and a half percent between July 2015 &16. The year before it clocked almost four and a half percent increase.

Even the mighty Williamsburg, where everything from apartments to kale is usually overpriced and overhyped, is experiencing vacancies. Roa examined Fifth & Wythe, a seven-story, 164-unit rental in Williamsburg, currently completing construction and currently has 14 available listings.  Similarly, The Berkley, a seven-story, 95-unit rental also in Williamsburg, still under construction, had six available listings.

More vacancies mean more concessions as once lackadaisical landlords find themselves doing something they haven’t done in years—hustle.  It’s a mad scramble to get signed leases before the winter chill sets in, when people are less likely to move. AM New York reported that real estate firm Citi Habitats found that 20 percent of new Manhattan rental leases in August came with bonus concessions. Last month’s vacancy rate was the highest it’s been in August since the brokerage began tracking the number in 2002.  And as for the usual concessions, such as a free first month’s rent or a waived broker’s fee, the Wall St Journal reported uneasy owners are now offering free gym usage for a limited time, iPads and broker gift cards. What next? A month’s free Uber, a Caribbean vacation?

“A lot of the owners look at what they got a year ago in rent and they just think that it should always go up,” Gary Malin, President of Citi Habitats told the WSJ. “The economy is not producing enough jobs to stomach these prices.”

But let’s not fool ourselves, here. It’s not as if a high school math teacher is suddenly going to be able to afford a Soho penthouse. New York rents are still astronomical. And even if you’re taken in by the lure of concessions, watch out, those brokers are slick. They have more strategies up their sleeves than David Copperfield has aces. They will never actually reduce the rent on the lease because that would cut into their yearly increase. Rather, they may add an addendum showing that there was a one-time deduction. Depending on the market and a renter’s hutzpah, they could push for an actual change on the lease. But then they might just find themselves hunkered down in their childhood bedroom for another year. At least there’d be mom’s cooking to look forward to.

Jeff Vasishta

ABOUT THE AUTHOR Jeff Vasishta

ABOUT THE AUTHOR 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.

  • AGORAFY
    Stefano Boeri, the architect mastermind behind the famous plant-covered skyscrapers, is now designing Forest Cities in Liuzhou, China. #ForestCity #China https://goo.gl/PsTUwv
  • AGORAFY
    Auction is the second scheduled in a month for a One57 unit and it could set a NYC foreclosure record. #BillionairesRow #Foreclosures https://goo.gl/NZ3zqD
  • AGORAFY
    Once a couch-surfing website, Airbnb moves on to luxury properties, further disrupting hospitality industry. #Airbnb #Luxury https://goo.gl/7TpLk6
While Other Real Estate Platforms Start Charging Agents $3-Per-Day Exposure Fee, Agorafy Remains Accessible To All
Real Estate searching platform are always finding news ways to diversify their revenues models. Case in point—on Tuesday July 18, Streeteasy, one of New York…
Is Real Estate Crowdfunding The Fix That Urban Housing In America Really Needs?
Saving money for a down payment? One can only hope. Most millennial in their twenties or thirties are mortified that they might never be able…
Brooklyn And Queens’ Real Estate Sub-Markets Continue Their Ascent To The New Heights
So, the sales prices in Brooklyn and Queens hit record highs. Again. Just like they did in December 2016 and at the end of this…
The Economy Of Car Services And Delivery Apps Might Be Making NYC Less Eco-Friendly
Living in an eco-friendly neighborhood is a good thing. And, as it always the case with the good things, it also costs more. High rents…
Building Communities: What The U.S. Developers Should Learn From Soho China
As our world emerges into the new period of globalization and technology, some of the most important by-products of this process are buildings that have…
Five Reasons Why All Entrepreneurs Must Keep Their Eyes On China
It is hard to overestimate the importance of Chinese influence on the modern global economy. Carving out a place in Chinese market and winning over…
Airbnb Up Their Game With A New Luxury Tier Featuring Mansions And Villas
Airbnb is about to seriously up their game. First, the company started testing a new service called Select in an attempt to push accommodation listings…
Will Artificial Intelligence Change Real Estate Industry In The Next Five Years?
Globalization and tech progress are the two forces that are irreversibly changing the world. Robots, machines, artificial intelligence (AI) tools, and, of course, vast amounts…