The Real Deal New York

Small pads see biggest rent increases 

In Manhattan, average rent for studios rose 7 percent in November, to $2,590

December 11, 2014 08:30AM
By E.B. Solomont

From left: a $2,500-a-month studio at 401 East 74th Street and a one-bedroom at 383 Grand Street asking $3,300 a month

From left: a $2,500-a-month studio at 401 East 74th Street and a one-bedroom at 383 Grand Street, asking $3,300 a month

Small apartments, big appetites. Studio and one-bedroom pads saw the biggest price gains in comparison to other unit types last month, according to Douglas Elliman’s monthly rental report. The report, released today, noted that in Manhattan, the average rental price for studios rose 7 percent to $2,590 a month in November, while the average rental price for a one-bedroom increased 6.9 percent to $3,396. By comparison, the average price for a two-bedroom increased just 0.1 percent to $5,201, and the average price for apartments with three or more bedrooms dropped 10.5 percent to $8,247.

“Across the three boroughs, the price growth is growing in the smaller units,” said Jonathan Miller, president of appraisal firm Miller Samuel and the author of the report. The city’s rising employment is the catalyst for this growth, Miller said. New York City’s unemployment rate in October dropped to 6.4 percent – a six-year low.

“The entry point to the housing market is the studio and one-bedroom market, [which] is being pressured by this growth in employment,” he said.

Overall, Manhattan saw its median rental price increase 4.4 percent in November to $3,235 a month. Last month, listing inventory fell 11.4 percent to 5,426 units while the vacancy rate fell to 2.31 percent and the number of new rentals increased 20 percent to 2,862.

Across the river in Brooklyn, the trends were similar, though the number of new rentals more than doubled to 581. Miller said that was a function of new development and tenant resistance to rising rents. The median rent in Brooklyn in November rose 5.3 percent to $2,948, $287 less than Manhattan, the third narrowest monthly spread in six years.

Meanwhile, in Queens, the median rent declined 8.2 percent to $2,525 a month, $710 less than Manhattan and $423 less than Brooklyn. “Rents [in Brooklyn] aren’t at record levels, but they’re flirting with the high end of what we’ve seen,” Miller said.

According to Citi Habitats, which also released a rental report today, 11 percent of rental deals in November included a landlord incentive – either a free month’s rent or payment of the broker fee. (That’s the highest rate since March, according to the report.)

“At this time of the year, people put incentives on to drive activity,” said Gary Malin, Citi Habitats’ president. “If they don’t rent now, they will be sitting on it for a while.”

Despite the rental market’s inherent seasonality, the rent decline in Brooklyn wasn’t as big a factor as it has been in previous months, said Andrew Barrocas, CEO of residential brokerage MNS. “The biggest driver is just employment in the area,” he said. According to MNS’ report, Boerum Hill saw the largest annual shift in rental prices in Brooklyn. In November, the average rent in that neighborhood jumped 11.5 percent year over year to $3,095.

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