The Real Deal New York

Manhattan renters: get ready for a cutthroat summer

Rents are up, vacancies are down in April — and trends show no signs of changing

May 09, 2013 12:01AM
By Guelda Voien

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Average rents in Manhattan in April (courtesy: Citi Habitats)

Rents continue to rise in both Manhattan and Brooklyn, according to monthly market reports from leading residential brokerages released today. And the market is only slated to tighten further, real estate executives said.

The median rent for a Manhattan apartment in April was $3,195 per month, a 6.5 percent increase from $3,000 per month in the same month last year, a report from Douglas Elliman shows. In April, there were 4,287 rental transactions in Manhattan, up 1.4 percent from a year earlier.

Meanwhile, the vacancy rate in Manhattan dropped to 1.28 percent, a 12 percent decline from the 1.46 percent rate in March, numbers from Citi Habitats show.

“It’s going to make for a very competitive summer,” said Gary Malin, president of Citi Habitats, the city’s largest brokerage. “You will see a vacancy rate sub 1 percent very soon.”

The reason continues to be that constrained supply in the sales market and tight restrictions on mortgage lending are keeping certain would-be buyers in the rental market longer, said Jonathan Miller, president of appraisal firm Miller Samuel and author of Elliman’s report, adding that this year is “on par” with a “robust” 2012.

“It’s somewhat surprising, because sometimes rental and sales markets move in opposite directions, and in Manhattan they are both moving up,” he said.

And, heading in to the busy summer rental season, the price increases and tight supply show no signs of letting up, particularly for apartment hunters interested in smaller unit types Downtown.

“We’re moving into the meat of the market,” said Mark Menendez, Elliman’s director of rentals, who predicted a summer of slow but steady price increases.

Demand for studios Downtown — particularly in the West Village and mostly from newcomers to Gotham — is the major force in the Manhattan rental market at the moment, Menendez said.

In March, average prices for studios showed the steepest rent increase, Citi Habitats’ figures showed, and April was no different. The average rent for a studio was $2,048, up 3 percent from a month prior, when the figure was $1,986, per Citi’s report.

“The majority of the activity that we are seeing now is coming from the entry level,” he said.

There is also a higher number of hybrid customers — that is, people considering buying or renting, based on what is available — on the hunt for new digs, Malin said.

“Interest rates are still incredibly attractive,” he said.

Over the river, price growth has been more modest, despite last month’s roaring market, Miller said.

“After several months of very robust year-over-year growth, [Brooklyn rents are] only up 1 percent, so the numbers there seem to be more volatile than in Manhattan,” he said. “But rents are still rising.”

Indeed, the median rent in Brooklyn increased to $2,700 per month, up a mere 1 percent from $2,673 at this time last year, the Elliman report shows.

However, the volume of rental transactions was up 10.9 percent, to 357 from 322 year-over-year, which could indicate continued resistance from renters, with many opting to find a new place rather than suffer rent increases.

Still, insanely low vacancy and inventory are a concern for the whole industry, experts said.

“Any new product that comes online is always at the highest end of the marketplace,” Malin said. “We need to add some more units.”

 

  • noclist

    Manhattan (and now parts of Brooklyn) are unique in that demand always exceeds supply. As a result, prices go up perpetually on both condos/coops and rentals.

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