NYC Apartment Rents Hit New Highs in July, But They Might Have Peaked

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The New York City rental market is hitting new all-time highs, but rents may hit a price ceiling soon, according to Jonathan Miller of Miller Samuel, who tracks rental data for Douglas Elliman

Average rent reached $5,588 in Manhattan last month, up 9 percent compared to a year ago, and $4,347 in Brooklyn, a 12 percent increase year-over-year, Elliman’s July market report found. In northwestern Queens, average asking rent was $4,003, growing 17 percent from a year ago. Rents are, once again, the highest they’ve been since 2008. 

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But new leasing volume was down 38 percent in Brooklyn and 52 percent in Queens compared to last year, and it’s even down 6 percent in Manhattan. The number of new rental listings was also on the decline in the boroughs, but by just 7 percent in Brooklyn and 11 percent in Queens. And inventory in Manhattan was actually up 10 percent from July 2022, to 7,381 listings. 

So it’s not a dramatic shortage of listings that’s slowing rental leasing down, said Miller. Fewer New Yorkers are willing to sign pricey leases in this extremely overheated market, and it’s starting to show.

“Leasing activity is declining because I think we’re reaching some kind of affordability threshold,” said Miller. “Landlords are pushing prices higher and people are not accepting them.”

July is typically the second busiest month of the year for new apartment leases, with August the peak, Miller said. While new transactions were down in the city, Miller added that “there’s a lot more going on in the renewal market,” but exact figures are unclear since that data isn’t public.

“I think there’s more aggressiveness in tenant retention for renewals, which is why we’re seeing fewer leases,” he said.

However, hitting a price ceiling doesn’t necessarily mean that rents will go down, Miller explained. 

“The opposite of rising rents isn’t falling rents,” he said. “I think if we’re running to a period of rapidly rising rents, the next step is stability. Every month a little bit up, a little bit down. It may not be until next month or the month after, but the drop in leasing activity means we’re topping out.” 

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