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Rents Set To Fall After a Summer of Record Highs, Experts Say

By Amy Zimmer | September 17, 2015 7:35am
 A rendering of the Rose Modern, at 74th Street and York Avenue, a rental building expected to open next month. It's the first rental on York Avenue in more than 30 years, said Douglas Wagner, of Bond New York.
A rendering of the Rose Modern, at 74th Street and York Avenue, a rental building expected to open next month. It's the first rental on York Avenue in more than 30 years, said Douglas Wagner, of Bond New York.
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BOND New York

MANHATTAN — Rents are still astronomical, but if you can sit tight a little longer you might catch a break as experts predict the rental market to start a decline.

Manhattan's median rent of $3,400 a month in August marked the 18th straight month for year-over-year increases, according to a report released Thursday from Douglas Elliman that shows prices up more than 7 percent from the year before.

For Brooklyn's north, northwest and eastern areas that the Elliman report tracks, the median rent rose nearly 11 percent over the past year to $3,112 a month. It was the third record-setting month in a row and the first time the median crossed the $3,000 threshold in the borough.

In the northwest section of Queens, which includes new developments in Long Island City, the median rent dipped slightly by 1.4 percent to $2,750 a month, Elliman found.

What's happening in Queens might be a harbinger for the rest of the market as the typical seasonal dip is expected to hit the market. As we head into the fall and then into the holiday season, rents generally drop, real estate brokers said.

"Typically every year after summer you start to see a drop in prices," said Jeffrey Schleider of Miron Properties.  

"We’ve already seen it drop in September. Many landlords have already dropped in pricing. They're being proactive and reacting to the market rather than let properties sit."

After August, which is the busiest month for rentals, the market slows down along with prices.

"Most [college] kids are back in school, most companies have filled positions, most families have settled in and, once the demand is less, prices go down," said Luciane Serifovic of Douglas Elliman.

"And what happens during the holidays, people are focused on time off [not apartment hunting]. So, if you can move around the holidays, that's the best time."

There are still deals to be had in Manhattan in Washington Heights and Harlem, she said — or the Upper East Side, "if you don't want to go that far."

Washington Heights' one-bedrooms, for example, averaged $1,696 a month. Harlem averaged $2,286 and the Upper East Side averaged $2,519, according to a report from CitiHabitats.

That pales in comparison to the high end of $4,193 a month for a one-bedroom in Gramercy/Flatiron, $4,018 in the West Village and $3,923 in SoHo/TriBeCa.

Don't expect huge dips though.

Instead, landlords — especially those who own fancy, new full-service buildings — will likely keep their face rents high but offer more concessions like a month's free rent or paying the brokers' commission.

"The word [from landlords] is, 'we're going to keep rents at a high plateau,' but some owner-paid commissions have already started," said Douglas Wagner of BOND New York, noting he's seen that happen at some new developments in the Financial District.

He thought renters would be pleased to see new rentals pop up in Manhattan, like with the Rose Modern on the Upper East Side on York Avenue near 74th Street, an avenue that hasn't seen new rentals in more than three decades, he said.

One-bedrooms in that building are expected to hit the market in the "mid-$4,000s" when it opens next month, Wagner said.