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With a flood of new apartment supply coming to the market, the annual effective rent growth for NYC has leveled out and even declined, according to a recent report by Axiometrics.
The market saw a 0.2% annual effective rent growth in June. Not only is this the lowest growth since 0.1% in February 2014, it’s a 371 bps drop from 3.9% this time last year.
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While this may not look pretty when put into dollars and cents—renters paid an average of $3,052 per month—the growth plateau means we’re at a tipping point, something about which the industry’s biggest names have expressed concern.
And while occupancy for the NYC metro was 97% in June, that's down from 97.2% a year ago.
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Looking ahead, the report states that 21,352 units are expected to come online by the end of the year, with another 20,303 in 2017.
The biggest construction hotbed is Brooklyn with 5,932 units headed for activation. Midtown West (2,681 units), New Jersey’s Hudson Waterfront (2,508), Queens (1,290) and West Village (1,070) are next.
Annual effective rent growth was below 1% for these submarkets, with the exception of Queens. While Brooklyn and Hudson Waterfront grew 0.8% and 0.5%, respectively, West Village and Midtown West rents declined 0.9% and 2.5%.
"New York is seeing a high amount of supply, and deliveries have been identified to continue at a rapid pace through 2017," Axiometrics VP of research Stephanie McCleskey says. "The new demand created by job growth is not enough to absorb all these units or for landlords to increase rents.”
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