Residential rent in Manhattan is once again on the upswing, reaching the second-highest median level in eight years.
But landlords shouldn’t get excited: The market is continuing to chug along a “high plateau,” said Jonathan Miller, author of Douglas Elliman’s latest rental report. The vacancy rate last month — 2.2 percent — is the highest seen in June in the past four years. And the share of new leases with landlord concessions — 9.7 percent — is more than double what was seen at the same time last year.
“You put all this together and the market is continuing to show softness,” Miller said. “I don’t see affordability dramatically changing for would-be tenants, but I also don’t see significant growth for the remainder of the year.”
Over the past few months, median rents in Manhattan have fluctuated slightly since a two-year climb came to a screeching halt in March. Median rents rose to $3,444 in June, the second-highest level in eight years. The highest was a median of $3,695 in February 2009, which was an anomaly in what was otherwise a deflated residential market, Miller said.
This month’s spike can be attributed to the fact that luxury median rent grew at a faster pace than the overall market. The median rents in this sector of the market saw a 6.8 percent year-over-year increase, coinciding with a 27.3 percent increase in new inventory. The median rental price for mid-tier rentals only increased 1.6 percent from last year, according to the report.
Gary Malin, president of Citi Habitats, which released its own Manhattan rental report on Thursday, said the high vacancy rate this month shows that out-priced renters are increasingly looking outside Manhattan.
“I think that speaks to where the market is,” he said. “I think there’s plenty of demand out there, but I think the demand is being somewhat suppressed by pricing.”
In Brooklyn, the median rental price reached $2,880 in June, a 2.9 percent year-over-year increase. June was the sixth consecutive month that median rents were up, and Miller noted that — unlike Manhattan — increases occurred across all tiers of the market at a similar pace. The median rental price in the luxury market saw a 6.8 percent year-over-year increase and the median price for entry-level properties jumped 5.9 percent from the same time last year, according to the Elliman report. In northwest Queens, the median rent hit $2,787, a 10.2 percent year-over-year increase. That jump, Miller said, is mostly due to an influx of new luxury development.
A look at the success of sales in New York City’s suburbs provides at least one hint as to where else some of Manhattan’s renters are fleeing. Sales volume in Westchester County was the second highest achieved in a second quarter in 10 years, according to a separate report released by Elliman. The number of sales jumped 11.5 percent from last year to 2,241 closed sales in the second quarter of 2016. That represented a 36.6 percent increase from the previous quarter.
“Sales activity in suburbs is high, and it’s coming from rental market in Manhattan,” Miller said.