Manhattan Residential Rental Market Tightening in 2Q, Says Prudential Douglas Elliman Report

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According to a new report by Manhattan-based Prudential Douglas Elliman, the rental market in New York City strengthened in the second quarter of 2011.

Tenant rental costs continued to rise. The average rental concession in the second quarter was 1.2 months of free rent or its equivalent in the second quarter, down from 2 months in the same period last year. As a result, the net effective monthly rent paid by tenants increased to $2,888 from $2,700 over the same period.

New York City listing inventory was contracted as new rental activity expanded. There was an 11% decline in the number of rental listings available, as new rental activity expanded 51.5% between 2010 and 2011 second quarters.

"Most of the new inventory introduced in 2008-2009 has now been absorbed and demand has been strong throughout Manhattan with very low vacancies," added Dottie Herman, President and CEO of Prudential Douglas Elliman."  This should lead to an improvement in pricing looking forward, especially in the third quarter, which is considered to be the height of rental season."

"The rental market continues to steadily improve from the landlord's perspective.  Rent concessions have basically disappeared, except for in new developments where it is common for landlords to offer concessions to expedite absorption of units," said Yuval Greenblatt, Executive Vice President at Prudential Douglas Elliman.

Negotiability stabilized as marketing time declined. The average listing discount, the difference between the original list price and the actual rent paid, was 1.7%, nominally below the 1.8% average of the same period last year, and half the 10-year average of 3.8%. Days on market fell sharply to 33 days from 53 days from the same quarter last year.

The 1-bedroom market outperformed other segments. The 1-bedroom market, the largest segment accounting for nearly half of all new rentals, saw the largest gain in activity as face rents remained stable.

Jonathan J. Miller, CEO of Miller Samuel, Inc said, "One of the effects of tight mortgage lending conditions and economic uncertainty has been a much improved rental market."

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