Manhattan rents reach record high with busy season yet to come

MANHATTAN apartment landlords are testing renters’ limits even before the market’s busiest season arrives.

The median monthly rate rose to a record-high US$4,175 in March, according to a report on Thursday (Apr 13) by appraiser Miller Samuel and brokerage Douglas Elliman Real Estate. That figure is up US$25 from the previous peak reached in July, and almost 13 per cent more than a year ago.

Jonathan Miller, president of Miller Samuel, said: “Landlords are finding that they’re pushing rents and they’re actually getting it.” His proof – the average lease was signed with a 0.7 per cent discount from the listing price, well below the 5 per cent discount that new leases got in February.

“The spread between what they’re asking and what it’s renting for is compressing,” Miller said, “and I don’t think that’s because landlords are lowering the prices of their listings.”

Apartment hunters have not been able to catch a break, even as more units became available and the borough’s vacancy rate continued to tick up. And the busiest and most expensive period of the year for rentals – traditionally July and August – is still ahead, signalling more record highs to come. Only an economic downturn and major job losses would shift that upward trajectory, said Miller.

The number of new leases signed last month was up 15 per cent from a year earlier, suggesting that many renters opted against renewing and moved on. Those on the hunt had more choices, with listing inventory up 41 per cent from last March. But apartments were scooped up more quickly, spending 39 days on the market, down from 61 days a year ago.

Agents have observed more interest from renters for the past three weeks or so, as New York’s weather has gotten warmer, said Hal Gavzie, Elliman’s executive vice-president for residential leasing. With inventory still limited, people are digging into more stagnant listings.

“Apartments that were sitting on the market for, say, 60 days or more now are rented,” he said.

The rent record was accompanied by other new peaks. The median rate for one-bedroom apartments, which made up 44 per cent of new leases in March, reached an all-time high of US$4,150. And across all unit sizes, what tenants paid after factoring in landlord concessions – such as free months or broker fees – hit its own record at US$4,124.

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In all, 15 per cent of new leases came with concessions, down from 18 per cent last March. The average savings amounted to 1.4 months of rent, slightly less than the 1.5-month average on deals signed a year ago.

The borough’s vacancy rate rose to 2.54 per cent last month from 1.89 per cent a year earlier.

Gavzie said he does not anticipate rents coming down in Manhattan, but he also does not think the sky’s the limit.

“There’s a ceiling,” he said. “These numbers that we’re seeing, I’m not sure how long they’re sustainable for.” BLOOMBERG