Manhattan Apartment Market Tightens as Leasing Triples, Concessions Fall

The Manhattan apartment market tightened in the fourth quarter, as the number of leases almost tripled and landlords cut concessions to renters.

New leases rose to 7,217 from 2,456 a year earlier, according to a report today by appraiser Miller Samuel Inc. and property broker Prudential Douglas Elliman Real Estate. The inventory of listings shrank 26 percent to 3,862 units and the time on market fell 42 percent to an average of 44 days.

“We went from the pendulum being significantly in favor of the tenant to perhaps more of a balance,” said Jonathan Miller, president of New York-based Miller Samuel. “Now we’re more in the middle and that’s measured by concessions, which aren’t gone. They’re reduced and more consistent with historical use.”

Landlords gained leverage as New York City’s economy rebounded from the plunge triggered by the September 2008 bankruptcy of Lehman Brothers Holdings Inc., Miller said. The unemployment rate fell to 9.1 percent in November, the lowest since April 2009. Private-sector employment rose 1.6 percent in the 12 months to about 3.2 million, with financial-services jobs rising by 5,900, according to the New York State Department of Labor.

Glenwood Management Corp. stopped offering rent concessions in March, said Gary Jacob, executive vice president of the New Hyde Park, New York-based company, which owns 25 Manhattan apartment buildings.

“In 2009, there was a lot of negotiating,” Jacob said. “That’s not happening now.”

Rents on the West Side saw the steepest increase per square foot, rising 12 percent to an average $55.31, Miller Samuel reported. Rents in the downtown area south of 42nd Street rose 5.3 percent a square foot to $49.86, while rents on the East Side, between 42nd and 96th streets, fell 6.4 percent to $44.94.

Median rents increased 1.7 percent from a year earlier to $2,950 and annual rent per square foot rose 4.5 percent to $49.13, Miller Samuel reported. A report yesterday by Citi Habitats said Manhattan’s average rent in the fourth quarter rose 5.9 percent to $3,127.

About 41 percent of leases during the quarter included a concession, saving those renters the equivalent of one month’s rent, Miller Samuel reported. A year earlier, concessions usually equaled two or three months of rent and were offered to a bigger share of new tenants, Miller said.

“Rents are stable based on what’s on the lease,” Miller said. “But concessions compared with the market a year ago have largely gone away.”

Date: 13 January 2011 | For the full report, please visit http://www.bloomberg.com