Manhattan apartment rents hit another record in frenzied market

[NEW YORK] Manhattan apartment rents hit a record high for a second straight month as the city roars back from the depths of the pandemic.

Tenants paid a median of US$3,644 on new leases signed in March, the most in 3 decades of data-keeping by appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. Rents jumped 23 per cent from a year earlier and are up US$14 from the previous record, set in February.

Mirroring the competitive sales market, nearly a fifth of leases were signed at rates above their asking prices - on average 9.7 per cent more. The numbers were similar for February, the first month the firms tracked rental bidding wars.

Demand is intense as Covid-19 restrictions are lifted, more employers get workers back into their offices and the city's social life bounces back. While some renters are just arriving in New York, others who took advantage of pandemic bargains now face the dilemma of renewing at substantially higher prices, or moving to keep their costs down.

Apartment-hunters are finding that the incentives so common during the pandemic's darkest months have become rarer and smaller. About 18 per cent of new leases last month had a landlord concession, such as a free month or payment of a broker's fee, down from 34 per cent a year earlier. The value of sweeteners dropped to 1.5 months of rent, down from 2 months in March 2021.

Helping give landlords the upper hand is the vacancy rate, which remained below 2 per cent for a fourth consecutive month. Vacancies averaged just over 2 per cent before the pandemic but surged above 10 per cent early last year, according to the firms.

The market may get even tougher for renters leading up to its busiest months, traditionally July and August, said Jonathan Miller, president of Miller Samuel.

"There's a fair amount of growth in front of us, this is not a peak yet," he said. "Right now it's ramping up into the spring and summer, and I would suspect we're going to continue atypical rent growth until then."

On the bright side, inventory is on the rise, which may help cool competition. While listings are still down significantly from a year earlier, there were 35 per cent more apartments available for rent in March than in February, Corcoran Group said in its own report. BLOOMBERG