December rent in Manhattan was the highest ever

Apartment buildings in the Upper East Side of New York.

Victor J. Blue | Bloomberg | Getty Images

Manhattan rents hit their highest level in December as apartment supply plummeted and homeowners began clamoring for double-digit increases.

According to a report by Douglas Elliman and Miller Samuel, the average rent for a Manhattan apartment in December reached $ 4,440, while the more widely observed net median rents (average rent including all discounts) reached $ 3,392 – the highest level in December. for the entire history of observations. The net effective median rents were up 21% year-over-year.

The surge marks a sharp turn from last year, when over 25,000 vacant apartments were rented out in Manhattan, and even the most optimistic brokers predicted a multi-year recovery. Now, rents often exceed pre-pandemic levels, and renters are facing a sharp rise in rents this year.

“Geyser of demand”

“What started as a trickle last year has become a geyser of demand,” said Jeanne Raskopf, Manhattan’s leading rental broker with Douglas Elliman. “I’ve been doing this for 14 years now and it’s absolutely unprecedented.”

Raskopf and other brokers say the demand is largely driven by college graduates finding new jobs in Manhattan. Many returned to the city last spring when Mayor Bill de Blasio announced that the city would reopen on July 1. Although only about a third of office workers have returned to their Manhattan jobs, the wait continues. to attract waves of people, brokers say.

New Yorkers who have sold their apartments and moved to Florida or another low-tax state are also renting to keep some of their jobs in the city. Raskopf said that even very wealthy people sometimes choose to rent Manhattan rather than buy it, waiting on the sidelines until they see how the city’s economic and cultural future develops after the pandemic.

All demand created a sudden shortage of supply. A year ago, the vacancy rate – usually around 2% for Manhattan – was 11%. According to the report, inventories fell 81% in December 2021 compared to December 2020.

Currently, the vacancy rate is unusually low – 1.7%, and only 4,700 apartments are available. The supply is so low that the total rental activity in December fell by 40% compared to last year due to a shortage of rental apartments.

Tender wars, double-digit rent hikes

Raskopf said she recently put up a two-bedroom apartment for sale for $ 12,000 a month. She immediately invited 26 people to visit the apartment and started a war between the tenants. She said the rents are likely to be 15% higher than the asking price – as have been many of the apartments she’s been listing lately.

“Forget about Covid discounts,” she said. “People know the listing price is usually the starting point now and they will have to offer higher rates to get it. I’d say more than half of my listings in the fourth quarter were at bid price or higher. ”

Existing tenants also receive large rent increases. Brokers say tenants who have bargains in 2020 and early 2021 are starting to hit lease terms. Landlords see they can increase their rent by 20-30% or more depending on the market and are looking to offset their lower gains or losses during the pandemic.

The biggest rent increases were in the city center, with an average rent increase of 28% to $ 4,100. Small studio and one-bedroom apartment rents rose the fastest, with studio rents rising about 21%.

While many landlords are trying to work with existing tenants to curb growth, some new tenants are quickly being pushed out of a market they can finally afford in 2020. a new generation of young tenants.

“Landlords are trying to make compromises,” she said. “But they had to keep paying their expenses and taxes during the pandemic, and now they can get their money back. Some tenants just say, ‘I can’t afford a 20% increase,’ and leave. “

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