< All Press

Manhattan Rent Hikes Slow as Apartment Tenants Push Back

The median monthly rent rose to $3,150, up 0.8 percent from a year earlier, according to a report today by appraiser Miller Samuel Inc. and broker Douglas Elliman Real Estate. It was the third consecutive month in which year-over-year rent growth hovered around 1 percent, compared with an average of 7.4 percent for the year through September, said Jonathan Miller, president of New York-based Miller Samuel.

“We’re not at this frenzied upward trajectory anymore,” he said. “We have some more gains in front of us, but I don’t think we’re going to see the same rapid ascent we saw over the last year and a half.” Record-low mortgage rates and rents that have climbed to within 4 percent of their 2006 peak have pushed some tenants into the sales market, while others refused steep rate increases and moved out in search of cheaper leases, according to Miller. New rental agreements signed in December, usually a slow period for leasing, jumped 21 percent from a year earlier to 2,901. “The bigger the number, the more push-back you’re getting from tenants at the time of renewal,” Miller said. “They’re choosing not to renew and going to a different location or different apartment. You’re paying more rent than you were before, but you’re probably paying less than your landlord presented to you.”

Improving Employment

Sales of Manhattan apartments surged 29 percent in the fourth quarter to 2,598, the highest for the period since at least 1987, Miller Samuel and Douglas Elliman said on Jan 3. The average 30-year mortgage rate dropped to a record 3.31 percent in November, according to McLean, Virgina-based Freddie Mac. Improving employment will continue to spur demand for leasing, putting monthly rents on course to surpass the peak of $3,265 in the second quarter, according to Miller. New York City added 66,200 jobs in the 12 months through November, according to the state Labor Department. Newly hired potential tenants will compete for housing with would-be buyers who can’t find something to purchase in a market where listings plunged to their lowest in 12 years. Kate Balingit, who works in advertising sales, knew she had to act quickly to find an apartment when she transferred to New York from Southern California. Before arriving in Manhattan one weekend last month, she set parameters: $2,400 a month or less, and no more than a 15-minute walk to her office in Chelsea.

Moving East

“I just wanted to find a place that would be the antithesis of everything I did not like about Los Angeles,” said Balingit, a California native. “I was really adamant about the walking part.” Armed with financial documents, she limited her search to the West Village. On the second day, working with Rory Bolger of Citi Habitats, she was the first to arrive at an open house for a 375-square-foot (35-square-meter), one-bedroom co-op on West 10th Street with a monthly rent of $2,350. The unit had new appliances and was an eight-minute walk to her office. It took only a few minutes for Balingit to decide that she found her apartment — and by then two other would-be tenants had come in to view it. Her broker took the rental agent aside. “I said, what do we have to do to get this apartment off the market?” Bolger recalled. “If you need a check and one month’s rent right now, I’ll be happy to get that for you.”

Personal Touch

Two days later, Balingit submitted a full application along with cashiers checks for $9,000 in rent, deposit and broker commissions. She also added a personal touch, sending the building’s co-op board a letter and a photo of herself. That was followed by a telephone interview with a board member. “You get rewarded by being on top of your game,” said Balingit, 27, who moved in this month. “I knew that I really, really wanted it.” In the West Village, average monthly rents in the fourth quarter ranged from $2,388 for a studio to $6,463 for a three- bedroom unit, according to New York-based Citi Habitats, which also released a report on the Manhattan rental market today. Rents in the Soho and Tribeca districts were among the city’s highest in the quarter, with studios leasing for a monthly average of $2,336, one-bedrooms for $3,715 and two- bedrooms for $5,976, according to Citi Habitats. The boroughwide average rent in 2012 was $3,412, up 5 percent from the previous year, Citi Habitats data show. Rents surpassed the 2007 peak of $3,394 in March, the brokerage said in April.

Luxury Apartments

The vacancy rate for Manhattan apartments was 1.38 percent in the fourth quarter, Citi Habitats said. Miller Samuel placed the vacancy rate at 1.77 percent last month, compared with 2.04 percent in December 2011. Leases for luxury apartments, or the top 10 percent of all rentals by price, increased 20 percent in December from a year earlier to 290 new agreements, Miller Samuel and Douglas Elliman said. The median monthly rent for those deals climbed 16 percent to $7,995. In Brooklyn, New York’s most populous borough, rents climbed 1.4 percent in December from a year earlier to $2,637, Miller Samuel and Douglas Elliman said in a separate report. The number of new leases jumped 13 percent to 234. Brooklyn apartments spent less time on the market than units in Manhattan, averaging 45 days in December, a 41 percent decline from a year earlier. Manhattan apartments averaged 57 days on the market before a lease was signed, up 54 percent from December 2011.

Get Weekly Insights and Research

Housing Notes by Jonathan Miller

Receive Jonathan Miller's 'Housing Notes' and get regular market insights, the market report series for Douglas Elliman Real Estate as well as interviews, columns, blog posts and other content.

Follow Jonathan on Twitter

#Housing analyst, #realestate, #appraiser, podcaster/blogger, non-economist, Miller Samuel CEO, family man, maker of snow and lobster fisherman (order varies)
NYC CT Hamptons DC Miami LA Aspen
Joined October 2007