“There’s some crazy stuff going on in New York.” David Neithercut, President and CEO of Equity Residential, told Bloomberg in April during the company’s Q1 Earnings Call. COO David Santee sums up why: “We had to join the concession party to close deals.”
Equity Residential is following a growing trend of many other New York City landlords, and is doing so out of necessity. They are under immense pressure to keep their buildings full in the face of increasing vacancy rates. According to the June 2016 Elliman Report, in Manhattan, “The vacancy rate rose from 2.07 percent to 2.3 percent when compared to the same month a year ago, and is the highest vacancy rate for June in four years.” The report also notes that the median rental price is up 2.2 percent since last June, and the number of new leases is up 33.5 percent as tenants continue to push back against increases applied at the time of renewal. Tenants were offered concessions on 9.7 percent of all new leases, up from 3.9 percent last June. While this has become a point of stress for landlords (Equity Residential alone gave an estimated $600,000 in concessions during the first quarter), as you may have guessed, this is great news for prospective renters.