As July rents notch another record, brokers eye August dip

Agents say open houses have attracted fewer prospective renters in recent weeks

Manhattan rents rise
(Illustration by The Real Deal with Getty Images)

Manhattan’s rental market showed no sign of a slowdown in July, as the median rent blew past records for the sixth straight month.

Seasonal demand, along with would-be buyers edged out of the purchase market by higher mortgage rates and low inventory stoked those gains.

Brokers say the first two weeks of August have shown early signs that the city’s rental frenzy may be easing. But even if demand does dip, it won’t translate into discounts anytime soon.

Last month, the median rent in New York hit $4,150, a near 30 percent jump over the July 2021 figure, according to a report by appraisal firm Miller Samuel for Douglas Elliman.

That increase, which follows months of fluctuating gains, shows that the smaller rent hikes that have hit new leases nationally have yet to grace New York.

“There’s not a definitive slowdown that is apparent,” said report author Jonathan Miller.

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(Illustration by The Real Deal with Getty)
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Rather, July’s report showed record-smashing figures in all corners of the market. In Manhattan, rents involving a concession topped $4,000 for the first time ever as luxury leases offering such discounts rose to the second-highest recorded price.

And in Brooklyn, marked-down rents hit a new price peak for the third month in a row and bidding wars were present 1 in 4 leases for the fourth consecutive month.

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On the ground, Douglas Elliman’s Hal Gavzie, said from listing to leasing, the frenzied pace of the rental market in July matched what brokers and tenants have seen through most of 2022.

“It’s just extremely stressful right now with how quickly these apartments are going,” he said.

Last month, Manhattan apartments typically spent 26 days on the market, down from 50 in June as buyers scrambled for the few available units. Vacancy rates stand just above 2 percent.

Meanwhile, tenants unsure of how high prices may rise are opting for longer leases, a trend that could prolong the low inventory environment. Miller’s report found the market share of two-year leases reached its highest level since November 2020.

Still, Gavzie said he saw demand subside a bit in early August. Open houses that pulled hundreds of interested people in July have begun to draw closer to 20.

“It’s by no means crickets,” he said. “You only need one.”

Typically, the rental market peaks in August and cools through the fall, making less demand in the dog days of summer an oddity.

Gavzie floated that younger renters, those still living at home, could be deciding to sideline their apartment search in hopes prices will fall. But with inventory still tight, they likely won’t move the needle on prices.

Miller doesn’t see rents falling unless unemployment jumps. July’s jobs report showed unemployment at 3.5 percent, a 50-year low.