Property managers are offering larger and larger concessions to try to attract tenants to their apartment communities, but the vacancy rates are inching higher anyway.
The percentage of vacant apartments in Manhattan in October rose to 2.47%, up from 2.39% the year before. At the same time, property managers offered potential renters months of free rent, equal to 28% of a year’s lease in October, on average, up more than four percentage points from a year ago.
Marcus and Millichap notes in a recent report that apartment absorption has begun to fall short of the wave of new unit deliveries in numerous markets, modestly softening Class A fundamentals. Class B and C apartments remain near record occupancy levels, but some renters from these properties are being enticed into higher-tier apartments by a range of incentives. Looking forward, positive employment trends and a thinning development pipeline offer the potential for performance reinvigoration.
For additional details, see the complete report
at http://www.marcusmillichap.com/research/researchreports.