Earlier this year, numerous publications including The New York Times extolled that 2017 would be ‘The Year of the Renter.’ This judgment essentially hinged on three key principles: renters across New York were either unwilling or unable to pay higher rents; rental inventory and vacancies across New York were on the rise with the completion of several new large-scale developments, and renters were getting better at negotiating.
These combined factors led to the sentiment that New York City’s rental market was softening, supported by an underwhelming spring and summer of 2016 and prices flat-lining into 2017. The question at hand, however, is how this has affected Jersey City rentals. Will 2017 also be the ‘Year of the Renter’ on this side of the river?
In order to answer this question, it’s important to concentrate on the three key principles behind the judgment made above.
Are Renters Unwilling/Unable to pay higher rents?
The best way to measure this is to compare this year’s rental prices across Jersey City with the same period last year. Based on data provided by MLS, average and median rental prices across all rented properties in Jersey City were flat from the same period in 2016. The average rented price across Jersey City rose just $2 from $2,280 to $2,282 while the median remained constant at $2,000.
Digging deeper into these stats reveals that even though market-wide price change was negligible when taking into account the fact that there was a significant increase in the number of properties rented in Jersey City’s more affordable neighborhoods, one could conclude that in fact, rental prices had increased in Jersey City. So, to answer the question above, renters in Jersey City seem equally if not more willing to pay higher rents so far in 2017.
Has there been an increase in inventory and vacancies?
The second key principle of ‘The Year of the Renter’ is that NYC has seen a significant increase in rental inventory leading into 2017. Looking into active listings on the MLS between January 1 and now when compared with the same period in 2016, this sentiment has also been reflected in the Jersey City market. Jersey City has seen a year on year increase over the same period of 41%. The standout neighborhoods have been Downtown and the Heights, which have seen inventory increases of 32% and 56% respectively.
A similar story can be told from looking at vacant units. At the end of the period in 2016, there were 217 units remaining available compared with 455 remaining in 2017. There has been a greater number of properties leased so far this year, however, this has been outweighed by the new supply coming on to the market, driven by the construction of large-scale developments in the Jersey City area.
As has been covered extensively in recent articles (and in the Development Map), Jersey City is expected to see the completion of many new apartment buildings over the coming years and as such, it would be fair to anticipate an increase in supply year-on-year to become the status quo moving forward.
Do renters have the upper hand in negotiation?
The third and final key principle is that renters are getting smarter and more willing to shop around for a deal. In order to measure this, it’s worthwhile looking into a number of properties in Jersey City across the last two years which rented at a discount to their asking price. Based on this it could be argued that from a price negotiation perspective renters are in a worse position than they were 12 months ago, with 11% of properties advertised on the MLS were leased at a discount vs. 19% over the same period in 2016. What this data doesn’t reflect is any incentives being offered landlords, including free months and discounted or abolished broker fees.
Laura Mooney, Director of Leasing for Dixon Leasing provided some insight into how the market feels to a landlord. “The Jersey City market is fragmented by neighborhood and as such we are seeing different trends in each area. Renters definitely have a lot of options when it comes to quality properties, my only word of advice would be to make sure you’re getting the most out of your broker and don’t pay unnecessary fees! At Dixon Leasing we have always waived broker fees, we also offer incentives such as one month free on some of our premium properties. Above all else, though, we aim to provide a quality service after the leases are signed to ensure our tenants remain happy with their properties – there’s no need to add unnecessary supply to the current market.”
What does this all mean?
Pulling all of this together, it would be difficult to argue that it is a renter’s market in Jersey City. Similar to NYC, Jersey City is definitely feeling a significant increase in rental supply, however, unlike NYC, it would be difficult to justify the notion that prices are softening and that prospective tenants are gaining bargaining power.
One possible explanation for this relatively unusual relationship is that Jersey City rentals are seeing increased demand from those looking to escape the NYC market. While considerable increases in apartment supply are projected, looking at the metrics examined in this article, there’s no other evidence to support rental prices softening over the coming years. It looks like the year of the renter is still yet to come for Jersey City.
A previous version of this article stated Dixon Leasing was a broker. It has been corrected to reflect Dixon Leasing is a landlord.