Manhattan apartment rents drop even as leasing activity picks up
MANHATTAN apartment rents unexpectedly slipped in May, a “sideways” move for the market at the start of one of its typically busiest seasons.
New leases were signed at a median of US$4,250 last month, a 3.3 per cent decline from a year earlier, according to appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. Still, rents were at the second-highest level on record for May, and unchanged from the previous month.
Rents typically rise through the spring as the market gets more competitive heading into the peak months of July and August. But last month’s performance extends the pattern that’s been playing out since late 2023, as rents have hovered below the record high of US$4,400.
“Prices are moving sideways,” said Jonathan Miller, president of Miller Samuel. “Where there is growth or decline, it’s nominal.”
The market has become busier though. In May, 7,085 new leases were signed in Manhattan, nearly 41 per cent more than a year earlier. But listing inventory also climbed, with the roughly 28 per cent increase helping to keep a lid on prices.
Miller said he thinks leasing is up in part because landlords are demanding renewal prices that are too high for their existing tenants, pushing those renters into the market. And with mortgage rates hovering near 7 per cent in May, some would-be buyers instead choose to rent, he said.
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Unless the Federal Reserve cuts interest rates sooner than expected, Miller anticipates the current dynamics of the Manhattan rental market to continue through the summer, with rents ending up slightly higher as students, recent graduates, families and others vie to secure an apartment by early September.
“I’m not anticipating runaway rents, but I don’t see them correcting much either,” he said.
Brooklyn’s market activity picked up, with the 4,341 lease signings in May reflecting a nearly 161 per cent gain from a year earlier and a record high. The median rent on new leases in the borough was US$3,600, the highest on record for May.
Leasing also reached a record in the section of Queens that includes Long Island City and Astoria, with 811 new signings in May, up 113 per cent from a year earlier. Median rents fell 0.1 per cent to US$3,400. BLOOMBERG
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