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Tight Credit, Better Economy Meant Rising Rents in May

Summer, the season of pricier rentals, is coming. And recent trends continue: rents are rising, concessions are falling, and there aren’t many bright spots in the data for tenants. The May 2013 Elliman report on Manhattan and Brooklyn rents is out today, and in Manhattan, the median rent rose 3.5 percent above the levels from a year ago. The median Manhattan rent is now $3,200/month. Rents have now been rising for almost two years, and graph guru/report preparer Jonathan Miller attributes the increases to tight credit and an improving city economy. (That improving economy, in fact, is the only positive JMillz sees for renters in the data, and then only in a macro, “it’s a good sign for NYC” way.) The vacancy rate has fallen to 1.60 percent (from 2.51 percent a year ago), and new rentals declined, suggesting that tenants are staying put rather than setting off in search of better deals when their leases come up for renewal. (Citi Habitats, as usual, has slightly different numbers on all this, putting the average rent for may at $3,448/month compared to Elliman’s $3,951/month and the vacancy rate at 1.09 percent.) Only 4.4 percent of leases included concessions, and the concessions were only a bit more than a month of free rent.

In Brooklyn, though the tight credit/higher employment factors are the same, the rental market is more volatile than in Manhattan. The median rent fell to $2,579/month in May, a drop of 3 percent. The number of new rentals rose 23.5 percent, a statistic hinting that Brooklyn renters aren’t so willing to go along with their landlords’ pricing as Manhattan residents are. Since rents started rising in Brooklyn about six months before they started in Manhattan, JMillz explains, Brooklyn landlords probably aren’t quite as in sync with the market as their Manhattan counterparts.

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