Think of New York rents like the temperatures ushered in by climate change: They may be hot now but they’re only likely to get hotter.
Manhattan prices have hit record highs for six straight months and May was no exception: the median rent reached $4,000 for the first time ever, according to a monthly report by appraisal firm Miller Samuel for Douglas Elliman.
Record demand has propelled those gains as prospective New Yorkers continue to pour into the city, pushing leasing volumes up and driving vacancy rates to scrape the bottom of the barrel. Last month, less than 1.8 percent of Manhattan’s rental stock was available to lease.
“If you talk to owners of free market apartments in New York, about 75% of the new leases are being made for tenants who are moving here from outside New York,” JLL’s chairman of New York investment sales Bob Knakal estimated at the New York Multifamily Summit last month.
Those incoming renters are looking on both sides of the East River.
Pandemic-era deals continued to dry up in Brooklyn as median rents with concessions notched a new high of $3,206, a 7 percent jump from the month prior and 21 percent increase above May 2021 levels. And for the second month in a row, one in four leases ended in a bidding war.
Northwest Queens saw some relief as the median rent for a discounted apartment fell to $2,898, a 5 percent decline from April prices. Still, that figure represents the second-highest level on record for the borough.
“I’ve been doing this for over 20 years and I’ve never seen inventory and the demand where it is right now,” said Hal Gavzie, executive manager of leasing at Douglas Elliman. “Rents just keep going and I don’t really see any signs of them slowing in the immediate future.”
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Jonathan Miller, who authors the Elliman report, said landlords, tenants and brokers should expect the pace of growth these past six months — a 2.5 percent jump on average, month over month — to continue into summer, historically the busiest season for rental turnover.
He added that the tightening of the housing market, a byproduct of higher mortgage rates and tighter credit conditions, is pushing even more people into the rental market and creating greater competition.
“You kind of have a perfect storm right now,” Gavzie said.
However, Miller said there is potential for the rate of rent growth to drop come autumn, as higher prices force some tenants to exit the market, boosting inventory to better meet demand.
“New leasing peaks in August every year so I would think the potential for easing the rate of growth might not happen until the fall,” Miller said.