Even luxury rents normalize as overall market softens

More concessions, fewer new leases signed in Manhattan

concessions, Douglas Elliman, Jonathan Miller, NYC Rental Market, rents

Since summer, the median price on a Manhattan apartment has held steady as rents had risen as high as inflation-battered tenants could bear.

Luxury apartments were the exception. In October, their median rent broke records for the second month straight, surpassing $16,000, as the city’s highest earners appeared immune to economic pressures.

Not anymore.

In November, the median rent on a luxury apartment slid more than 11 percent from October to settle at $11,500. The number of new luxury leases signed plunged by 38 percent to 316, according to a report by appraisal firm Miller Samuel for Douglas Elliman.

Report author Jonathan Miller said the drop-offs suggest that luxury rents likely topped out in October.

“I see it as a sign of the market normalizing,” he said, “since luxury median rent was still the second highest on record.”

The dip in new leases, meanwhile, shows the market softening.

Hal Gavzie, head of residential leasing at Douglas Elliman, tied the drop in demand to “tenants choosing to renew expiring leases rather than compete in a still near-record-high rental market.”

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Miller said leasing rates last month leveled out at roughly the same volume as in November 2019.

The median Manhattan rent for all apartments rose 2 percent to $4,095. Since July’s peak, it has hovered around $4,000, a sign that rents have plateaued, Miller says.

There have been other, albeit slight, signs of weakening demand.

Manhattan had the “most significant drop in new lease signings since the onset of the pandemic,” Miller noted. The decline points to folks holding fast to the rent they know rather than risk the fees and premiums of a still pricey market.

Concessions were granted in more leases — 16 percent, compared with 13 percent in October — and bidding wars have also faded, according to the report.

In Brooklyn, the softening showed up in prices. The median rent in Kings County dropped nearly 6 percent from October to $3,300, and 21 percent of new leases offered concessions, up from 15.5 percent the month before. The median rent slid 6 percent to $3,247.

Still, the dips mark the first significant reduction in prices since autumn 2021, so it’s too early to call it a trend. As long as job creation holds steady and unemployment stays low, rents will be hard-pressed to fall, Miller says.

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