New Yorkers are staying single longer, and that means growing demand for one-bedroom and studio apartments. But the real estate industry has been slow to meet that demand, new data from listing site RentHop indicates.
In nine New York City neighborhoods, the median rent for a one-bedroom apartment is more than 90 percent of the median rent for a two-bedroom apartment and in 92 out of 213 neighborhoods surveyed it is more than 80 percent.
On first sight that’s puzzling. Two-bedroom pads tend to be bigger and can be shared with roommates, which should make them significantly more expensive on average than one-bedroom pads. So why isn’t that the case?
One possible explanation is that there simply aren’t enough one-bedroom apartments in many neighborhoods relative to the supply of two-bedroom pads, and that this mismatch drives up rents. RentHop’s data suggests as much.
The chart below shows that rents for one-bedroom apartments compared to two-bedroom pads tend to be higher in neighborhoods where there are less of the former.
In Bushwick, for example, there are about three two-bedroom apartments for every one-bedroom apartment. The few one-bedrooms on the market tend to be expensive: their median rent is 91.5 percent of the area median rent for two-bedrooms. Compare that to Downtown Brooklyn, where a surge in new construction has pushed up the supply of one-bedroom apartments. The area has about two one-bedroom pads for every two-bedroom apartment, and they tend to be cheaper in comparison: The median rent for a one-bedroom is just 71.7 percent of the median rent for a two-bedroom pad.
There are of course other possible reasons why one-bedrooms are expensive. For example, one-bedroom pads could be clustered in pricier new developments, raising their median rent relative to older two-bedroom pads. This could be the case in areas like Gramercy Park, where one-bedrooms tend to be expensive even though there are a lot of them relative to two-bedrooms.
Still, the bottom line is that developers looking to cash in should consider building one-bedroom pads in Bushwick and Ocean Hill.