“Apartments for Rent” sign near a building in the East Village in New York, USA.
Gabby Jones | Bloomberg | Getty Images
Rents in Manhattan rose 2% in November, dashing hopes that prices would cool off and forcing many tenants to drop or cut rent, brokers said.
According to a report by Douglas Elliman and Miller Samuel, the median rent for an apartment in Manhattan was $4,033 in November, compared to $3,964 in October. The median rent, which is often skewed by luxury sales, declined slightly over the month but still rose 19% year-over-year to $5,249 in November.
The hike continues to challenge forecasts that sky-high New York City rents will fall after the summer and will give tenants some relief as rents hit record highs. While rents are declining in many parts of the country, rents in New York remain consistently high and the number of vacant or vacant apartments remains low.
“Rent is not coming down as fast as many hope,” said Jonathan Miller, CEO of Miller Samuel.
Rent increases in New York also increase pressure on headline inflation, as rents are an important component of inflation indices, and New York City is the nation’s largest rental housing market.
Rents in Manhattan are so high that many tenants have begun to waive prices—either by moving out of town or by finding lower and less expensive rents. The number of new leases signed in November fell 39% from October, Miller said, the biggest drop since the pandemic began in 2020.
Brokers and real estate experts say landlords overdid it when they started renewing leases signed in 2020 and 2021, often demanding rent increases of 20% or more. Because landlords typically require tenants to earn 40 times their monthly rent every year, rising average rents have pushed many tenants to breaking point.
“There is some dead end,” said Bess Friedman, CEO of Brown Harris Stevens. “Rent has skyrocketed in 2021 and now tenants are stuck. People are not going to sign new leases at these prices, they are too expensive. Landlords need to start behaving more sensibly.”
Friedman said one of her friends faced a 30% rent increase after a recent lease extension. “She felt like she was being deceived,” Friedman said.
The vacancy rate remains low, so landlords are not forced to reduce rents in the near future. The November vacancy rate was 2.4%, according to Miller Samuel, still below Manhattan’s historical norm of about 3%.
There are some early signs that landlords may start to capitulate in 2023. The number of landlord concessions, which may include a month of free rent and other deals, rose to 16% in November from 13% in October. Real estate experts say the sharp drop in new leases, if it continues, will eventually force landlords to meet tenants at a lower price.
Joshua Young, executive vice president and managing director of sales and leasing at Brown Harris Stevens, said landlords have been overly optimistic about rent increases of 20% or more and many are now starting to cut prices or add more perks to help them the apartments were full.
“A lot of landlords are stuck with inventory so they don’t get a raise, so they cut the price,” he said.