reporter2
14-03-22, 11:46
Manhattan apartment rents soar to record high on fierce demand
Tenants paid a median rent of US$3,630 in February, up 28 per cent from a year earlier
Mar 12, 2022
New York
(BLOOMBERG) MANHATTAN apartment rents soared to an all-time record last month. Tenants paid a median of US$3,630 in February, the most for any month in more than a decade of data-keeping and up 28 per cent from a year earlier, according to a report on Thursday (Mar 10) by appraiser Miller Samuel Inc and brokerage Douglas Elliman Real Estate.
Leasing costs are now 2.5 per cent higher than the previous record, set in April 2020, before the rental market collapsed and New York City became the US epicentre of the Covid-19 pandemic.
Demand for apartments has been intense, even without a mass return to the office. The freebies landlords relied on to fill units while so many New Yorkers were fleeing the city are now rarer than they were before the pandemic hit.
Many renters who stayed and took advantage of sweet deals may be forced to move or absorb substantially higher costs when their leases come up for renewal.
While rents had been climbing steadily for some time, "this is the first month post-lockdown that there's been a substantial gain over pre-pandemic levels", said Jonathan Miller, president of Miller Samuel. February's median was up 7.1 per cent from the same month in 2020.
Tight supply
The inventory of available apartments tumbled 81 per cent from a year earlier to just over 4,500, the fewest for the month of February since 2008, Miller Samuel and Douglas Elliman said. The tight supply is fuelling fierce competition, with nearly 1 in 5 new lease signings drawing bidding wars, up from nominal levels last year.
Concessions, such as a free month, were offered in just 20 per cent of new leases. That's below the more-normal rate for the market of around 25 per cent, according to Miller.
In some cases, renters who had signed leases at a discount are seeing increases of 15 per cent to 30 per cent, according to Hal Gavzie, executive manager of leasing at Douglas Elliman.
He said that so far, tenants have mostly opted to renew because inventory is so tight and other options are few and far between.
"I would anticipate seeing a certain percentage of those renters to be unwilling or unable to renew" in the coming months, Gavzie said. "I haven't seen it yet, but we're going to just have to wait and see."
Units that do hit the market are moving rapidly. A new listing for an apartment going for around US$2,500 might draw 50 to 100 emails in 1 day asking to view the space, according to Gavzie. Some places that get multiple offers end up going for hundreds of dollars over the asking price.
Doorman buildings
Demand was especially hot at the higher end of the market. Last month, 58 per cent of new leases were signed at buildings with a doorman, which tend to be pricier than non-doorman properties, according to a report by Corcoran Group. That's one of the highest shares in more than 3 years, the brokerage said. As mask and vaccine mandates lift and companies call employees back to their desks, New York is set to welcome a wave of new and returning residents.
"With the city relaxing Covid restrictions, and more office workers and students returning to in-person work and school, I expect demand to rise even further in the near term," Gary Malin, chief operating officer at Corcoran, said in a statement. "I suggest tenants enter the market prepared, patient and willing to compromise."
A shortfall in new construction over the next few years will only intensify the pressure. Each year, about 2,000 fewer units than the historical average will enter the market, according to a Corcoran report released earlier this week.
For-sale apartments in the pipeline are skewed towards luxury buyers, forcing many middle-class New Yorkers to remain renters, deepening competition and accelerating price growth.
Tenants paid a median rent of US$3,630 in February, up 28 per cent from a year earlier
Mar 12, 2022
New York
(BLOOMBERG) MANHATTAN apartment rents soared to an all-time record last month. Tenants paid a median of US$3,630 in February, the most for any month in more than a decade of data-keeping and up 28 per cent from a year earlier, according to a report on Thursday (Mar 10) by appraiser Miller Samuel Inc and brokerage Douglas Elliman Real Estate.
Leasing costs are now 2.5 per cent higher than the previous record, set in April 2020, before the rental market collapsed and New York City became the US epicentre of the Covid-19 pandemic.
Demand for apartments has been intense, even without a mass return to the office. The freebies landlords relied on to fill units while so many New Yorkers were fleeing the city are now rarer than they were before the pandemic hit.
Many renters who stayed and took advantage of sweet deals may be forced to move or absorb substantially higher costs when their leases come up for renewal.
While rents had been climbing steadily for some time, "this is the first month post-lockdown that there's been a substantial gain over pre-pandemic levels", said Jonathan Miller, president of Miller Samuel. February's median was up 7.1 per cent from the same month in 2020.
Tight supply
The inventory of available apartments tumbled 81 per cent from a year earlier to just over 4,500, the fewest for the month of February since 2008, Miller Samuel and Douglas Elliman said. The tight supply is fuelling fierce competition, with nearly 1 in 5 new lease signings drawing bidding wars, up from nominal levels last year.
Concessions, such as a free month, were offered in just 20 per cent of new leases. That's below the more-normal rate for the market of around 25 per cent, according to Miller.
In some cases, renters who had signed leases at a discount are seeing increases of 15 per cent to 30 per cent, according to Hal Gavzie, executive manager of leasing at Douglas Elliman.
He said that so far, tenants have mostly opted to renew because inventory is so tight and other options are few and far between.
"I would anticipate seeing a certain percentage of those renters to be unwilling or unable to renew" in the coming months, Gavzie said. "I haven't seen it yet, but we're going to just have to wait and see."
Units that do hit the market are moving rapidly. A new listing for an apartment going for around US$2,500 might draw 50 to 100 emails in 1 day asking to view the space, according to Gavzie. Some places that get multiple offers end up going for hundreds of dollars over the asking price.
Doorman buildings
Demand was especially hot at the higher end of the market. Last month, 58 per cent of new leases were signed at buildings with a doorman, which tend to be pricier than non-doorman properties, according to a report by Corcoran Group. That's one of the highest shares in more than 3 years, the brokerage said. As mask and vaccine mandates lift and companies call employees back to their desks, New York is set to welcome a wave of new and returning residents.
"With the city relaxing Covid restrictions, and more office workers and students returning to in-person work and school, I expect demand to rise even further in the near term," Gary Malin, chief operating officer at Corcoran, said in a statement. "I suggest tenants enter the market prepared, patient and willing to compromise."
A shortfall in new construction over the next few years will only intensify the pressure. Each year, about 2,000 fewer units than the historical average will enter the market, according to a Corcoran report released earlier this week.
For-sale apartments in the pipeline are skewed towards luxury buyers, forcing many middle-class New Yorkers to remain renters, deepening competition and accelerating price growth.