Manhattan's Multifamily Supply Glut Has Dampened Its Busiest Month
July is traditionally apartment landlords' favorite month in Manhattan; demand is at its highest, so rent can be too. But this July has been subject to the same issues that have plagued the multifamily market all year.
Leasing costs in Manhattan dropped 1.9% from July 2016 to last month, with the median net effective rent for the borough coming in at $3,350 for the month, according to a study by Douglas Elliman and Miller Samuel reported by Bloomberg. It was the first time in five years that July rents have seen a year-over-year decline.
Chiefly to blame for the market's softness is the influx of new deliveries, such as Brookfield Property Partners' The Eugene in Hudson Yards and JDS Development Group's American Copper Buildings on the Lower East Side. Landlords continue to offer concessions, such as paying off broker fees or giving away first month's rent to remain competitive in a market with so many attractive options.
“The last thing anyone wants to do, especially now, is rack up vacancies,” Citi Habitats President of Brokerage Gary Malin told Bloomberg. “If you rack them up now, going into a slower time, it's going to be even harder to achieve your price.”
On top of such large deliveries as the 1,605 units delivered in the Eugene and American Copper Buildings alone, nearly 6,000 more apartments are scheduled to come online in the second half of this year, adding even more urgency for landlords to fill their vacancies. Through the first half of 2017, vacancy has remained fairly steady at 2.9%, according to a Marcus Millichap report.