Manhattan rents in the first quarter of 2012 broke records set before the economic crash, according to market reports released today by residential brokerages Prudential Douglas Elliman and Citi Habitats, and experts attribute the increase to tight credit markets that have prevented tenants from entering the sales market.
The average monthly Manhattan rent reached $3,650 in the first quarter, a 6 percent increase over the $3,445 average during the same period last year, according to the Elliman report, which uses industry-wide data compiled by Jonathan Miller, the president of appraisal firm Miller Samuel. The number of rental transactions also increased, jumping 14.3 percent to 7,642 units from 6,665.
“Anecdotally, everything was competitive — rents were going up, there was greater competition for apartments,” said Yuval Greenblatt, an executive vice president who is on Elliman’s management team. “We saw the numbers [in the first quarter reports] clearly supported those anecdotes.”
Citi Habitats, which relies on the firm’s own undisclosed number of transactions, pegged the average rent at $3,418 in March, the highest monthly figure since the firm began tracking these data in January 2002. Citi Habitats’ previous record, set in May 2007, was $3,394.
Average rents were also up slightly over the last quarter, both reports show.
“These numbers don’t surprise me,” said Gary Malin, president of Citi Habitats. “We’ve seen the writing on the wall for some time.”
What’s new is that rents continue to rise even while the overall economy is more or less stalled. That is the result of a restrictive lending environment that has forced some would-be homeowners unable to meet strict borrowing requirements to remain tenants.
“What’s driving the rental market is more about tightness of credit than an improving economy,” Miller said, “unlike the last boom in the mid-decade where we had this frothy, credit-fueled economy and people were just priced out and became renters.”
Some tenants are surveying the rising rents in Manhattan and deciding to move to the outer boroughs, Malin said.
But rents in Brooklyn are also on the rise. The median rent for a Brooklyn one-bedroom rose to $2,308 in March, up 8 percent from the previous year, according to a monthly Brooklyn report released today by residential brokerage MNS.
Meanwhile, a first-quarter report released yesterday by online rental management firm RentJuice reveals that Brooklyn rents had skyrocketed compared to the previous year.
Another feature of the current rental market is what Miller described as “musical chairs,” where more Manhattan tenants are opting to move instead of renewing their leases, particularly when landlords present them with rent increases.
Listing inventory was up 33.4 percent in first-quarter 2012, to 5,167 units from 3,874 units, the Elliman report says. This was largely the result of greater mobility among Manhattan renters — and not additional units being offered for rent, experts said.
Although rental units sat on the market for an average of 41 days, about half a week more than in the first quarter of 2011, the listing discount dropped by about half compared to the previous year, the Elliman report shows. Landlords discounted rents by 2.2 percent in the first quarter of 2012, compared to 4.3 percent a year earlier.
The vacancy rate was up a sliver, resting at 1.22 percent versus 1.08 percent in the first quarter of 2011, the Citi Habitats report says.
While average rents were up across all unit sizes, the greatest increases were found in one-bedrooms, where rents rose 6.5 percent over the same period last year, Citi Habitats says. Studio apartments saw the smallest increase, at 3.6 percent.