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Prices Dip for 2- and 3-Bedroom Apartments in Manhattan and Brooklyn

By Amy Zimmer | February 9, 2017 5:32am | Updated on February 10, 2017 4:54pm
 A two-bedroom apartment at 365 Bond, a new amenity-filled building in Gowanus, is listed by Douglas Elliman for $6,457 a month and includes no broker fee.
A two-bedroom apartment at 365 Bond, a new amenity-filled building in Gowanus, is listed by Douglas Elliman for $6,457 a month and includes no broker fee.
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Douglas Elliman

MANHATTAN — If you’re looking for a two- or three-bedroom rental in Manhattan or Brooklyn, now may be the time to find a “deal.”

These larger apartments had the biggest price dips or highest amount of concessions — when landlords pay the broker’s fee or offer a month or two of free rent — in both boroughs, according to a January rental report from Douglas Elliman released Thursday.

In Manhattan, where more than 30 percent of rental deals included some sort of concession from the landlord — a record high — two-bedrooms led the pack, with nearly 35 percent of such deals including incentives, according to Jonathan Miller, who authored the report.

While the median price for two-bedroom units remained stable compared to the same time a year ago, at $4,595 a month, the median price for a three-bedroom dropped nearly 7 percent to $5,500 a month.

In Brooklyn, these larger apartments saw the biggest price drops, too.

The median for a two-bedroom fell nearly 4 percent to $3,025 a month and for a three-bedroom, the median dropped nearly 8 percent to $3,318 a month.

In Brooklyn, landlord concessions also hit a new record, more than tripling from a year ago, with 18 percent of deals seeing some sort of incentive.

The prices for two- and three-bedroom apartments, however, remain relatively high.

“The thing is, you’re getting a deal, but it’s not inexpensive,” Miller said. “Relative to the last couple of years it’s less expensive because of the concessions, but it’s not inexpensive because rents have risen over time.”

In general, rentals that are for higher-end properties and higher-prices saw prices cool or even drop — and larger apartments tend to be in those categories — while the lower end of the market, especially in non-doorman buildings, still saw price growth, the report found.

“The two- and three-bedrooms represent the higher end of the market, in general, and the market is softest at the top,” Miller said. “A lot has to do with excess supply.”

Overall, two- and three-bedrooms make up about a third of the market, while one-bedrooms dominate most of the deals, at about 44 percent, Miller noted.

When it comes to these larger apartments, tenants have been resisting price increases and landlords have lost a bit of leverage, said Douglas Elliman’s Hal Gavzie.

“The renters are just pushing and resisting the increases we’ve seen over the last two years and developers have so much inventory they have to offer deals. So, if you’re looking in a building where you have the amenities, you’re definitely going to be able to get a month or two free,” he said. “At that part of the market, you’re going to be able to get a better deal.”

But while pricey new developments or luxury high-rises are offering concessions, such discounts are harder to find in fourth-floor walk-ups or in “entry-level” apartments, meaning those that are smaller and lower-priced, Gavzie said.

“I understand that 30 percent of the market has concessions, but that means that 70 percent doesn’t,” he said of Manhattan.

Whether the softening prices of two- or three-bedrooms change the rent versus buy calculus for New Yorkers remains to be seen.

“For people who are considering buying, but the down payment is still a reach, they might think, ‘I have more leverage as a renter,’” he said, “but the flip side is where interest rates still are [at historic lows]. At the end of day, you have to crunch the numbers and see what your monthlies will be.”