Manhattan’s Q4 rental market: it was the best of times, it was the worst of times

Rents hit $3,973 on average, reports show

Average rents in Manhattan (courtesy: Citi Habitats)
Average rents in Manhattan (courtesy: Citi Habitats)

The Manhattan rental market continues to display a “strange dichotomy,” as Douglas Elliman’s director of rentals Mark Menendez put it, with rents unseasonably strong at the high end, and both renters and landlords believing they can do better in other market segments. In December, the median rent for a Manhattan apartment rose 0.8 percent year-over-year, to $3,150 from $3,125 per month, according to Douglas Elliman’s December rental report, released today.

However, the average rent climbed a whopping 10 percent year-over-year in December, to $3,973, up from $3,613, per Elliman’s numbers. The difference takes into account the way rents at the upper end can skew the average, and lends credence to a trend brokers have repeatedly described to The Real Deal: the luxury rental market is white hot.

At the same time, at the lower end of the market, tenants and landlords were out of synch, Menendez said. Renters “are starting to shop their rents — they are convinced they can move and find better rent,” he said. But landlords are also reading the reports of ever-higher rents, and deciding that now is the time to market a vacancy, he said.

The average Manhattan studio had a median rent of $2,345 in December, a negligible $5 less per month than the same period last year, while one-bedrooms were down 2.3 percent, to $3,125 from $3,200 per month, according to Elliman’s numbers. Two-bedrooms held almost exactly steady, at $4,595, down 0.1 percent from $4,600. Three-bedrooms, which were scarce of late, according to Menendez, had a median rental price of $7,220, up more than 21 percent from $5,950 last December.

“A lot of renters are moving into the larger size apartments with entry level rents on the Upper East Side” because of a lack of supply Downtown, Menendez said.

The Manhattan vacancy rate nudged up to 1.38 percent in the fourth quarter of 2012, up 3 percent over the previous quarter, according to Citi Habitats’ rental market report released today.

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“We’re seeing a lot of bargain shoppers,” said Gary Malin, the president of Citi Habitats.

But the picture for 2012 as a whole was merrier, Malin said. “The rental market was incredibly strong,” he said, crediting tight lending standards. “There were a lot of people who wanted to be purchasers who couldn’t be.”

During the year as a whole, the average Manhattan apartment rented for $3,412, up 5 percent from $3,248 in 2011, according to Citi Habitats’ data. The vacancy rate remained relatively steady, the report says, despite the fact that there was more inventory available.

Malin said outerborough activity remained strong, and that renters, particularly first-time renters in the city, are increasingly seeking Manhattan alternatives such as Astoria, Queens.

In Brooklyn, the median rent in December was $2,637, up 1.4 percent from $2,600. The average number of days a listing spent on the market dropped significantly, however, down more than 40 percent to an average of 45 days, from 76 days, Elliman’s data show.

“We should have a very strong spring season,” Menendez said.