Rising Rents and Falling Concessions in Manhattan and Brooklyn; Prices Down in Queens

Douglas Elliman Real Estate, the largest brokerage in the New York Metropolitan area and the second largest independent residential real estate brokerage in the United States by sales volume, today releases its July 2019 Rental Market Report for Manhattan, Brooklyn and Queens. The report shows more of the same trends that have emerged over the past several months in Manhattan and Brooklyn, with rents rising and concessions falling. The opposite was true in Queens, where prices slipped for the first time in five months and concessions were on the rise.

Rent growth accelerated this month in Manhattan where price trends and the number of new leases both increased. Concessions trended lower, and the vacancy rate was unchanged. Brooklyn saw similar trends, with the net effective median rent rising year-over-year for the eighth straight month and the median rental price hitting a new record high at $3,000. The market share of concessions has fallen year-over-year in the borough for every month so far in 2019.

“The rental market in Manhattan and Brooklyn continued to strengthen again this month,” said Hal Gavzie, Executive Manager of Leasing for Douglas Elliman Real Estate. “This is partly a result of the ongoing uncertainty in the sales market, with potential buyers still camping out with rentals. Prices keep going up, setting a record in Brooklyn this month, and concessions are elevated but falling, so it certainly seems like this market strength will continue.”

Queens showed some signs of weakness, with the net effective median rent falling year-over-year for the first time in five months and the median rental price falling for all apartment sizes. Concessions expanded, though notably the market share of new development concessions declined.

“The softer market in Queens was a bit of an outlier in July, and it’s too early to call that weakness a trend,” said Jonathan Miller, President and CEO of Miller Samuel Inc. and the author of the report. “The market share of concessions decreased across all three boroughs, and I anticipate that the overall strength of the rental market will be maintained in the coming months.”

MANHATTAN RENTAL MARKET HIGHLIGHTS
Overview

“Year over year rent growth has accelerated in recent months as the market share of concessions trended lower.”

- Median net effective rent rose the most year over year in 47 straight months

- The market share of concessions rose annually for the sixth time in seven months

- All three price trend indicators rose sharply above the year ago result

- Median annual rental price gains increased more in higher price categories

- Year over year median rent growth was flat above the $10,000 and $15,000 thresholds.

- The luxury entry threshold hasn’t seen a year over year in 2019

- New development median rent increased more than twice as much as existing median rent

Key Trend Metrics (from same period last year)

(Face Rent)
- Median rental price increased 5.7% to $3,595

- Rental price per square foot rose 6.1% to $70.01
- Average rental price increased 7% to $4,292

(Net Effective Rent – includes concessions)
- Median rental price rose 6.5% to $3,521

- Share of new rental transactions with OP or rent concessions was 30.6%, down from 35%
- Size of concession was 1.1 months of free rent or equivalent, down from 1.3 months

- Manhattan vacancy rate was unchanged at 2.00%
- Number of new leases rose 5.1% to 6,460

- Listing inventory fell 2.2% to 5,912
- Days on market was 26, down from 27

- Listing discount was 0.9%, down from 1%

BROOKLYN RENTAL MARKET HIGHLIGHTS

Overview

“Median rent set a record as the market share of concessions continued to fall.”

- Net effective median rent rose year over year for the eighth straight month

- Concession market share has fallen annually for each month in 2019

- Average size of a studio and a 3-bedroom rental rose sharply

Key Trend Metrics (from same period last year)

(Face Rent)
- Median rental price was $3,000 up 1.7% [record]
- Rental price per square foot rose 2.6% to $47.87

- Average rental price rose 1.6% to $3,360

(Net Effective Rent – includes concessions)
- Median rental price rose 3.1% to $2,918
- Share of new rental transactions with OP or rent concessions was 34.4%, down from 41.4%
- Size of concession was 1.4 months of free rent or equivalent, down from 1.6 months

- Number of new leases rose 13% to 1,759

- Listing inventory slipped 0.9% to 1,976
- Days on market was 27, unchanged
- Listing discount was 0.6%, down from 0.8%

QUEENS RENTAL MARKET HIGHLIGHTS

Overview
[Northwest Region]

“The market weakened with softer rental price trends and more landlord concessions.”

- Net effective median rent fell year over year for the first time in five months

- Median rental price has fallen year over year for all bedroom categories

- Market share of new development apartment concessions declined as existing apartment concessions expanded

Key Trend Metrics (from same period last year)

(Face Rent)
- Median rental price declined 3.6% to $2,915
- Rental price per square foot rose 6.2% to $52.04

- Average rental price slipped 1.4% to $3,057

(Net Effective Rent – includes concessions)
- Median rental price decreased 3.9% to $2,837
- Share of new rental transactions with OP or rent concessions was 38.9%, up from 32.3%
- Size of concession was 1.2 months, down from 1.3 months

- Number of new leases rose 13.3% to 268

- Listing inventory declined 5.5% to 393
- Days on market was 27, unchanged
- Listing discount was -0.1%, down nominally from 0%

- New development market share was 33.3%, up from 26.5%

About Douglas Elliman Real Estate

Established in 1911, Douglas Elliman Real Estate is the largest brokerage in the New York Metropolitan area and the second largest independent residential real estate brokerage in the United States by sales volume. With more than 7,000 agents, the company operates approximately 118 offices in New York City, Long Island, The Hamptons, Westchester, Connecticut, New Jersey, Florida, California, Colorado and Massachusetts. Moreover, Douglas Elliman has a strategic global alliance with London-based Knight Frank Residential for business in the worldwide luxury markets spanning 60 countries and six continents. The company also controls a portfolio of real estate services including Douglas Elliman Development Marketing, Douglas Elliman Property Management and Douglas Elliman Commercial. For more information on Douglas Elliman as well as expert commentary on emerging trends in the real estate industry, please visit elliman.com.