Manhattan had its worst May in a decade for new rental leases, as residents leave the city and the real estate industry remains on lockdown, according to a new report.
New leases fell 62% last month, according to a report from Miller Samuel and Douglas Elliman.
May also saw the largest year-over-year increase in new listings in nearly four years, with the number apartments listed for rent in Manhattan jumping 34%, to 7,420. There were more empty apartments on the market last month than at any time since real estate appraiser Miller Samuel started collecting the data in 2006.
This suggests that the shutdown of the real estate market, coupled with New Yorkers fleeing the city, is putting growing pressure on landlords and prices. And there are signs that June won't be much better. According to real estate service provider UrbanDigs, there were only 377 new leases signed in Manhattan in the first week of June — down 67% from a year ago.
While brokers blame the declines on the market shutdown — as brokers are barred from showing apartments or holding open houses — the rising inventory suggests prices could be under pressure even when the real estate industry reopens, likely in late June or early July.
"The supply of available rental units continues to accumulate," UrbanDigs said in its report, "hinting that renters will have the upper hand in negotiability when the market finally reopens."
Larger and more expensive apartments are getting hit the hardest. New leases for three-bedroom apartments in Manhattan dropped 71% in May. The average rental price for the top 10% of rentals fell by 20%.
Meanwhile, landlords are making concessions. The share of new leases in Manhattan with rental concessions — typically equal to about 1.5 months of free rent — increased to 42% from 34%.