A monthly report revealed that rents fell last month for Manhattan apartments of all sizes for the first time in at least four years, due to an expansion of apartment supply.
"There's so much inventory, and that influx is hitting across all price points, even the studios," Douglas Elliman Executive Director of Leasing Hal Gavzie said, according to The Australian Financial Review.
"There were a lot of studios that hit the market and have been sitting there. They had to reduce prices," he said.
According to the Elliman Report, which is a monthly survey of Manhattan, Brooklyn and Queens rentals, the market share of rentals with landlord concessions slipped to 26.4%, the second highest on record, after reaching a record high of 30.9% in January.
"The market share of landlord concessions was 19.1% in the same month last year, a record at that time," the report said.
"This was the seventeenth consecutive year over year supply increase in seventeen months. Elevated use of concessions remained firmly in place across apartment sizes, ranging from a low of 25.1% for studios to a high of 27.9% for 2-bedrooms. Median net effective rental price fell year over year for the seventh consecutive month. February's median net effective rent declined 1.7% to $3,260.
"Landlord’s use of concessions has been effective in protecting the face rent by keeping the vacancy rate in check. The vacancy rate was 2.44%, up slightly from 2.31% in the same period last year. This pattern was consistent with the sharp drop in the number of new leases, down 27.9% to 3,634 over the same period as landlords were more effective on tenant retention at time of renewal. Listing inventory expanded 11.7% to 6,872 over the same period."
According to the AFR, the number of new leases fell 28 per cent last month to 3634.
Median rents for two-bedroom apartments fell 5.2 per cent from a year earlier to $US4500, the firms said. One-bedroom costs slipped 1.3 per cent to $US3350, and the median for units with three bedrooms or more dropped 3.7 per cent to $US6031.
The number of new leases slipped 6.3% to 948, indicating that the use of concessions was keeping renewal signings relatively high.