Average Apartment Rent in Manhattan Nears $5K For the First Time Ever

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New York City’s pandemic rental pendulum has swung in the opposite direction as higher-earning people return to the city in droves, pushing the average monthly apartment rent in Manhattan to $4,975 — its highest level to date, according to Douglas Elliman’s newest rental report.

The median rental price in the borough also reached $4,000, as the vacancy rate for apartments remained below 2 percent for the sixth month in a row, according to Elliman’s data analyst, Jonathan Miller of Miller Samuel. Average rent for a studio in Manhattan was $3,088, up 25 percent from a year ago, while the average one-bed was asking $4,153. The average two-bed rental on the market was asking $5,717, and finally, three-bedroom rents were averaging $9,160.

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He noted that it was the fourth consecutive month that both the median and net effective rental price for apartments had set new highs. The last time Miller saw this kind of trend was in 2009, when the median rental price hit $3,695, which was the highest it had been in a decade. 

Listing inventory was down 70 percent compared to a year ago in the borough, from 19,000 listings in May 2021 to 5,700 in May 2022. Average rents were up 25 percent year-over-year, while median rents were up 22 percent year-over-year. 

Brooklyn, meanwhile, saw similar year-over-year declines in rental inventory but slightly less dramatic rental increases. The average rental price in Kings County was $3,744 in May, up 17 percent from $3,188 in May 2021. The median rent for an apartment was $3,200, which was a 21 percent increase from $2,644 a year ago. The number of apartments on the market was down 78 percent, from 13,410 listings a year ago to 2,954 listings last month.

The market is so tight that some brokers are trying to charge as much as 40 percent of a year’s rent for the broker fee on rent-stabilized listings in Manhattan. That would have been unheard of a year ago, let alone before the pandemic. Renters are also engaging in aggressive bidding wars for desirable apartments in expensive parts of Manhattan and Brooklyn. Roughly 19 percent of leases signed in Manhattan last month involved bidding wars, and 24 percent—or close to one in four—new leases in Brooklyn resulted in tenants overbidding.

Historically, the current amount of rental inventory and rental prices are not far from where they were pre-pandemic. The number of rental listings in Manhattan is 4.4 percent higher than May 2019. Still, the average number of Manhattan apartments on the market in any given month over the past 10 years was 7,488, so the current figure of 5,776 is quite low, according to Miller. 

And the median rental price in Manhattan is 14.3 percent higher than it was three years ago. 

“We’re looking at a market that dropped and recovered quickly, and now we’re in the extra credit stage for market performance,” said Miller. 

He added that the recent hike in mortgage rates affected people’s ability to buy apartments in New York City and other parts of the country, pushing more people into the rental market.

“The 30-year fixed [rate mortgage] was just over 3 percent on New Years Eve of 2021, and now it’s 5 percent,” said Miller. “It’s gone up about 2 percent. That’s a 40 percent drop in affordability. So what that does it tips people on the margin into the rental market which adds more demand to an already tight market.”

Rebecca Baird-Remba can be reached at rbairdremba@commercialobserver.com.