A billboard for rental apartments from Chelsea Tower.
Jeff Greenberg | Getty pictures
The average monthly rent for an apartment in Manhattan exceeded $ 5,000 for the first time – and brokers say that demand and prices are heading even higher into the fall.
The average apartment rent in June was $ 5,058, the highest recorded, according to a report by Miller Samuel and Douglas Elliman. Average rental prices were up 29% compared to last year, while the median rent increased by 25% to 4,050 dollars a month.
Apart from pricing out many tenants, the increases can have contagious effects among broader inflationary pressures. Rental prices are a key component of the state̵[ads1]7;s consumer price index, which rose 9.1% from a year ago in June, and New York is the country’s largest rental market.
The continued price pressure on Manhattan rentals could contribute to higher inflation in the coming months, and put more pressure on the Federal Reserve to raise interest rates in an attempt to tame prices.
“There is no sign of a decline, at least not yet,” said Jonathan Miller, CEO of Miller Samuel.
Miller said higher mortgage rates and fears of a housing collapse are driving more potential buyers into the rental market.
At the same time, the supply of Manhattan apartments available for rent, which exploded during the pandemic, is now close to record lows. The vacancy rate at the end of June was only 1.9%, with around 6,400 vacant flats – a decrease of 46% from last year.
Brokers say many families and tenants who left the city during the pandemic are now returning, despite concerns about high crime, taxes and troubled subways. Younger tenants are also pouring into the rental market. Millennials and even some members of the Gen Z demographic come to town after college or work remotely from high-rise rentals to take advantage of the city’s culture and nightlife.
“At the end of the day, they want to be in New York,” said Valirjana Gashi, a broker at Serhant. “Even some of the families who went to Miami are coming back.”
July and August are usually the biggest rental months in Manhattan, as renters look for start dates in September before returning to school and work. Brokers say that while open houses for sale listings are almost empty, open houses for rent have never been more crowded.
“When a good rent comes on the market, especially downtown, there are lines down the block,” Gashi said.
Bid war is now routine for rentals. Gashi said one of her clients is looking at a one-bedroom center listed at $ 6,000 a month – up from $ 5,000 a month last year. The client offers $ 6,750 to try to ward off rival bidders.
She also has a client who plans to buy in Manhattan, but who rents in the meantime, with a budget of over $ 30,000 a month.
“He is willing to spend on rentals because when the time comes to buy, he hopes to save even more on the purchase,” she said. “He thinks sales prices are about to fall far.”