The Real Deal New York

Manhattan, BK rents press higher with no end in sight

Last year's signs of a leveling off have been negated by months of growth: Elliman
By Tess Hofmann | February 12, 2015 12:01AM

Both Manhattan and Brooklyn saw rental price indicators rise overall in January, pushed upward by continuously rising employment in the city and still-tight lending practices, according to Douglas Elliman’s January rental market report.

In Mahattan, the median rental price rose 5.9 percent to $3,299 and the average increased 4.6 percent to $3,974, while in Brooklyn, the median climbed 2.5 percent to $2,901 and the average increased 4.5 percent to $3,201. This was in contrast to last month, when medians rose but averages declined.

“The market forces that are creating this upward pressure on rental prices haven’t changed,” said Jonathan Miller, president of real estate appraisal firm Miller Samuel and the author of the Elliman report. “New York City is seeing rapid employment growth and tight mortgage lending tips people back into the rental market.” Those people, Miller said, would normally have become first-time buyers.

Miller said that though there were some signs in 2014 that rental markets were softening, the evidence now seems to show that “things are kicking in again.”

“We had a few false alarms last year that suggested rents were leveling off,” he said. “After a few months it just continued to rise.” Brooklyn rents have climbed in 18 of the last 20 months, while Manhattan rents are in their 11th consecutive month of growth.

“I think it would be unrealistic to expect much relief for tenants in the coming year,” he said.

While Manhattan vacancy rates did increase slightly to 2.43 percent from 1.81, Miller said that this statistic combined with decreased negotiability and days on market means that conditions are still tight.

In Manhattan, median studio rents were up to $2,470 from $2,351 in January of last year, a 5.1 percent increase,  while median two-bedroom rents were up to $4,527, a 0.6 percent increase from $4,500. In Brooklyn, studio rents decreased 1 percent to $2,357, while two-bedrooms increased 6.4 percent to $3,215. Queens saw a massive year-over-year rent jump in large apartments, with median three-bedroom rents up 46.2 percent to $2,995.

A report by Citi Habitats, also released today, found that the East Village had Manhattan’s highest vacancy rate in January, at 2.5 percent. Citi Habitats president Gary Malin said this was a symptom of landlords pushing rents too high.

“There’s a point at which tenants start to feel there are other alternatives …they are more willing to look outside of desired zones,” he said. “Landlords are sticking to their prices and not adjusting to market conditions.”