What you should know
- Despite population loss during the pandemic, the median rental price in Manhattan has now increased by 30% compared to 2019.
- The median monthly rental price in July was $5,588, up 9% from last year and setting a new record. Median rent of $4,400 per month also hit a new record, along with price per square foot of $84.74, according to a report by Miller Samuel and Douglas Elliman.
- It was the fourth time in five months that rents in Manhattan hit a record.
Rent prices in Manhattan hit a new high in July as higher interest rates and low supply continued to push prices up.
Median monthly rent in July was $5,588, up 9% from last year and setting a new record. Median rent of $4,400 per month also hit a new record, along with price per square foot of $84.74, according to a report by Miller Samuel and Douglas Elliman. It was the fourth time in five months that rents in Manhattan hit a record.
Despite the population loss during the pandemic, median rents in Manhattan are now up 30% compared to 2019. Jonathan Miller, chief executive of Miller Samuel, the appraisal and research firm, said August rents could mark a new record because it is typically the peak rental month as families look to move out before the start of the school year.
“We could see another month of records,” Miller said.
Sky-high rents in Manhattan have continued to defy the predictions of analysts and economists. The township’s population dropped by 400,000 between June 2020 and June 2022, according to US Census data. While experts say the population has increased since last year, they say it is likely still down from 2019.
Additionally, offices in Manhattan remain less than half occupied due to remote work. According to Kastle Systems, the New York offices were only 48% occupied at the end of July.
Yet despite population loss and the rise of remote work, rents in Manhattan continue to rise. Brokers say the lack of apartments for sale, due to higher interest rates, has forced many prospective buyers to rent. Younger workers have also flocked to the county since the pandemic.
Miller said that while the number of apartments listed is below the historical average, apartment rental inventory actually increased 11% in July. At the same time, the number of new lease contracts signed decreased by 6% compared to last year.
The combination of rising inventory and falling rents suggests Manhattan renters may finally have hit their financial limit, Miller said.
“It looks like rents are probably close to the tipping point,” Miller said. “We are seeing transactions slide due to affordability.”
Rent increases in July were across the board, from small studios to spacious three-bedrooms. However, the largest and most expensive apartments have seen the biggest price increase since the pandemic.
While studio apartments have seen rental prices rise 19%, median rental prices for three-bedroom units are up more than 36%.
Brokers say one reason for the rental shortage is the growth in Airbnb units. Recent rental regulations have also taken tens of thousands of units off the market, brokers say. Landlords say the laws, which limited rent increases on rent-stabilized units, made it unprofitable to renovate dilapidated apartments. As a result, many are now empty and unrentable.
The brokers add that even with rent increases of 30% to 40% last year, many tenants chose to stay, which also limited supply.
“The vacancy rate remains low, making it difficult for renters to get an apartment,” said Janna Raskopf of Douglas Elliman. “Many tenants have renewed their current leases and are staying where they are. I think this trend will continue at least for the next few months.”
This article It was originally published in English by Robert Frank for our sister network CNBC.com. For more from CNBC enter here.
