Rental market strengthens across Manhattan

TRD New York /
May.May 11, 2011 12:01 AM
Source: Citi Habitats

College graduates looking to land an affordable Manhattan rental apartment in
their first foray into the real world, better act fast — or they may be out of luck. As
the summer rental season inches closer, the market is growing stronger by the
month, according to two reports released today by Citi Habitats that track rental
deals brokered by the firm’s 12 offices.

Manhattan vacancy rates have declined every month since December’s 12-month high of 1.34.
In April the rate was 0.94, which compares favorably to the 1.23 percent vacancy
rate achieved in April 2010. At the same time, rents have spiked across units of every size in
Manhattan, led by studios and one-bedroom units — 3 and 4 percent, respectively,
month-over-month — which together comprises three-fourths of the rental
market, according to Gary Malin, president of Citi Habitats.

One of the reports was a 2010 year-end review of the market, while the other was
specific to April 2011. The year-end report showed growth of 2.8 percent and 1.7
percent in studios and one-bedroom apartments, respectively, but half-percent
declines in two- and three-bedrooms compared with 2009.

However, in 2011 those larger units have closed the gap in a big way. Rents for two-
and three-bedroom units soared. Two-bedrooms rose 9.3 percent while three-bedrooms climbed 9.1 percent in April 2011 compared to their 2010 averages, and
now sit at $3,711 and $4,946, respectively.

And there’s no neighborhood renters can turn to escape the rate hikes. With the
exception of studios in Washington Heights, every single unit type in every single
neighborhood increased in April 2011 compared with April 2010, according to the
monthly report.

But Wall Street, typically a haven for young, just out-of-college professionals saw
rates soar highest, as the monthly average one-bedroom apartment rent jumped to
$3,356 in April 2011, up 35.1 percent from a year earlier. Meanwhile rents for two-bedroom homes skyrocketed to $4,473 a month, 27.4 percent more than in April 2010. And if the strategy for avoiding high rents was once to look north, it
may not be anymore. Harlem rents are beginning to close the gap, too, especially
for larger units. Whereas, monthly rents stood at $1,768 for two-bedroom homes in
April 2010, those numbers hiked 31.4 percent over the course of the year to $2,324.

The neighborhood most immune to rent spikes was Soho-Tribeca, where the
vacancy rate was already at just 0.52 percent in April 2010, and prices were the
highest in the city at $5,220 per month. Still, studios and one- and two-bedroom units
saw rent increases of roughly 5 percent year-over-year.

In 2009, more than 50 percent of leases brokered by Citi Habitats included at least some
landlord concessions, and even through April 2010 that number hovered at 41
percent. But by December 2010 just 22 percent of leases brokered included a
landlord concession.

The 2010 year-end report found that 23 percent of Manhattan renters earn less than
$50,000 per year, with the recovering rental market likely weighing most heavily on
that segment of New Yorkers.

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