A billboard for rental apartments in Chelsea Tower.
Jeff Greenberg | Getty Images
Average monthly rent for an apartment in Manhattan crossed $5,000 for the first time — and realtors say demand and prices will soar even higher in the fall.
According to a report by Miller Samuel and Douglas Elliman, the median rent in June was $5,058, the highest ever. Median rents were up 29% from last year, while median rents rose 25% to $4,050 per month.
Aside from pricing out many tenants, the hikes could have knock-on effects amid broader inflationary pressures. Rents are an important part of the government’s consumer price index, which is up 9.1% in June from a year agoand New York is the nation’s largest rental market.
Continued price pressure in Manhattan rents 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 are no signs of slowing down, at least not yet,” said Jonathan Miller, CEO of Miller Samuel.
Miller said higher mortgage rates and fears of a housing crisis are driving more potential buyers to the rental market.
At the same time, the supply of rental apartments in Manhattan, which has exploded during the pandemic, is now near an all-time high. Vacancy at the end of June was only 1.9%, with about 6,400 apartments available — a decrease of 46% from last year.
Real estate agents say many families and renters who left the city during the pandemic are now returning, despite concerns about high crime, taxes and troubled subways. Younger tenants are also entering the rental market. Millennials and even some members of the Generation Z demographic come to the city after college or work remotely from high-rise housing to take advantage of the city’s culture and nightlife.
“Ultimately, they want to be in New York,” said Valirjana Gashi, a real estate agent at Serhant. “Even some families who went to Miami come back.”
July and August are typically the biggest rental months in Manhattan, as renters look for September start dates before returning to school and work. Realtors say that while open houses for sale listings are almost empty, open houses for rent have never been more crowded.
“When a good rental comes on the market, especially downtown, there are rows away,” Gashi said.
Bid wars are now routine for rentals. Gashi said one of her clients is looking for a one-bedroom downtown listing for $6,000 a month — up from $5,000 a month last year. The customer bids $6,750 to try to stave off rival bidders.
She also has a client who plans to eventually buy in Manhattan, but rents in the meantime, on a budget of over $30,000 a month.
“He is willing to spend money on the rent 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 go way down.”