The rental market in Manhattan is hotter than ever, as the average rent soared to a new record of nearly $6,000 a month in July, according to the latest report from appraisers Miller Samuel and brokerage giant Douglas Elliman. The report showed that the average rent in Manhattan was $5,588 last month, up 9.3% from last year and 30% higher than in 2019, before the pandemic hit.
Pandemic Exodus Reversed as Workers Return to the City
One of the main factors driving up the rents in Manhattan is the reversal of the pandemic exodus that saw many residents flee the city for cheaper and safer suburbs or other states. As more people get vaccinated and more businesses reopen or require employees to return to the office, many former and new renters are flocking back to the city, creating a surge in demand for apartments.
Manhattan Rents Reach New Heights in July as Demand Outstrips Supply
According to the report, there were 7,378 new leases signed in Manhattan in July, up 38.4% from last year and 81.8% from 2019. The vacancy rate dropped to 3.33%, the lowest since February 2020. The inventory of available apartments also shrank by 24.4% from last year and 46.5% from 2019.
Fewer Concessions and Discounts Offered by Landlords
Another factor that contributed to the rise in rents was the decrease in concessions and discounts offered by landlords, who have regained their bargaining power in the tight market. Concessions are incentives such as free rent, waived fees, or gift cards that landlords use to attract tenants. Discounts are reductions in the asking rent that landlords accept to close a deal.
The report showed that only 30.4% of new leases in Manhattan had concessions in July, down from 60.4% last year and 36.9% in 2019. The average concession value was equivalent to 1.1 months of free rent, down from 1.8 months last year and 1.2 months in 2019. The share of new leases with discounts dropped to 17%, down from 44% last year and 28% in 2019.
Record High Rents Across All Apartment Sizes and Types
The increase in rents in July was across the board, affecting all apartment sizes and types. The report showed that the median rent for a studio apartment in Manhattan was $3,236, up 6.7% from last year and 22.4% from 2019. The median rent for a one-bedroom apartment was $4,366, up 7.4% from last year and 25.6% from 2019. The median rent for a two-bedroom apartment was $6,226, up 4% from last year and 23.8% from 2019. The median rent for a three-bedroom apartment was $10,744, up 11.2% from last year and 34.5% from 2019.
The luxury segment of the market also saw record high rents in July. The report defined luxury apartments as those in the top 10% of the market by price. The average rent for a luxury apartment in Manhattan was $15,260, up 12.8% from last year and 28.2% from 2019.
Renters Face Stiff Competition and Limited Choices
The report suggested that renters who are looking for an apartment in Manhattan face stiff competition and limited choices in the current market conditions. Many renters have to act fast and be flexible on their preferences and budgets to secure a lease.
Some renters may also have to compromise on the quality or location of their apartments, as some landlords have not invested in renovations or maintenance during the pandemic. Others may have to look for alternatives outside of Manhattan, such as Brooklyn or Queens, where rents are also rising but still lower than in Manhattan.