Source: Citi Habitats
Perhaps Manhattan residential rental prices couldn’t continue to climb higher, or maybe July’s slight decrease in average rents will prove to be a blip on the radar, but as of now Gary Malin, president of Citi Habitats, called it “insignificant.”
After a scorching start to the season, the average Manhattan rent decreased 0.4 percent from last month to $3,358 in July, $14 less than June’s average, and $36 less than the all-time high achieved in May 2007, according to the July Manhattan rental market report released today by Citi Habitats that covers the approximately 1,200 deals brokered by the firm.
Three-bedroom apartments helped keep the overall average up as those units rented for 1 percent more than they did last month. But studios and one- and two-bedroom apartments each experienced average decreases of 1 percent.
“The small price adjustment, for now, is like a rounding error,” Malin said. “The market is still extremely strong and it’s still a landlord’s market.”
Indeed, rent prices remain up from July 2010, as studios and one-bedrooms posted 7 percent gains in July 2011, averaging $1,953 and $2,676 per month, respectively. Similarly, two- and three-bedroom apartments were each priced 9 percent greater than they were last July, at $3,754 and $5,052, respectively.
The Manhattan vacancy rate rose to 0.86 percent in July, up from 0.69 percent in both May and June 2011, which was a five-year low. Last July the vacancy rate was higher, at 0.88 percent.
Pricing in most neighborhoods remained relatively stable. The biggest gainers were studios and three-bedroom units in Washington Heights and two-bedroom homes in the West Village. Larger units on the Upper East and Upper West sides performed the worst on a month-over-month basis.
Though the price decreases throughout the borough were ever so small, the fact that they took place during a traditionally strong month amidst weakening economic indicators might be cause for concern down the road, according to Malin. But for now, he said, one month of declines is not nearly enough data to draw any conclusions.
“As we move into the cooler months and demand diminishes, the question is, do we see a normal step down suggesting the typical ebbs and flows of the market?” Malin said, “or is this the beginning of a dramatic decline resulting from global economic issues?”
Unlike other market analysts, Malin predicted that prices wouldn’t continue to climb last month, simply because tenants get to the point where they are unwilling to pay the premium landlords are demanding to live in Manhattan. Malin said yesterday that could be contributing to the flattening market, although he did report that activity through the first nine days of August “has been tremendous.”