The Real Deal New York

Reports: Manhattan rental market gets even tighter

With rents again hitting record-highs, vacancy rate dips below 1 percent

June 07, 2012 12:01AM
By Katherine Clarke

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(credit: MNS)

According to a market report released today by Citi Habitats, the Manhattan residential rental vacancy rate slipped below 1 percent last month, reinforcing brokers’ claims that the rental market is now hotter than it’s been since the mid-2000s.

The vacancy rate in May hit 0.89 percent, its lowest level since July 2011, the Citi Habitats data shows. Citi Habitats President Gary Malin attributed that in part to declining inventory, due to a lack of new-construction residential buildings.

“Competition for available apartments can be intense,” Malin said, adding: “There are only about 2,200 [rental] units that are coming on the market this year. That just isn’t enough to saturate the market.”

And for the third consecutive month, rents increased in all apartment categories to records highs, according to the monthly report. The average rent for a Manhattan apartment in May was $3,438, a 3 percent increase from the same period of last year and slightly more than the previous month. Studio rents rose 4 percent year-on-year to $2,065, while one-bedrooms rented for an average of $2,810, up 5 percent from May of 2011. For two bedrooms, the average rent was $3,920, up 4 percent from the same period of last year, according to the Citi Habitats data, which is based on the firm’s rental transactions.

Malin said the current tightness of the leasing market has led many renters to head for the outer boroughs.

“In many cases, apartments don’t even hit the open market, and instead are rented through connections and word of mouth,” Malin said. “This can be frustrating for potential tenants, and … may cause them to consider neighborhoods they may not have before.”

Malin noted that potential renters should be prepared to act quickly when they find an apartment they like; that means bring along all necessary documentation along on the apartment search.

Despite the continuing momentum of the Manhattan rental market, there are still deals to be had, said Andrew Barrocas, founder of residential brokerage MNS, which also released a report today.

Asking rents for doorman studios in Soho fell 3 percent in May to $2,923 from the previous month, and are $427 below the high of $3,350 last September, according to the MNS report. One-bedroom, non-doorman units in the Financial District saw a drop month-on-month drop of $40 to $3,081, and fell $26 from last year, based on MNS transactions.

Meanwhile, the MNS report found that Tribeca and Soho have the most-expensive rental units in Manhattan. The priciest studios are found in Tribeca, where non-doorman studios can rent for as much as $4,080 per month and doorman studios for $3,273 per month. Tribeca also had the priciest non-doorman one- and two-bedroom apartments, which rented for highs of $4,830 and $8,038, respectively. Soho had the priciest doorman one- and two-bedrooms, however, with one-bedrooms renting for as much as $4,792, while two-bedroom rents ranged up to $8,433.

“There’s no ceiling in New York,” Barrocas said, noting that new developments in the pipeline will do little to stymie the strength of rentals as the population in the city continues to rise. According to a recent study by the Department of City Planning, Manhattan’s population could grow by 220,000 to 290,000 people by 2030.

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