Manhattan rents hit record highs in January
A man enters a building with rental apartments in New York.
Eduardo Munoz Alvarez | VIEW press | Corbis News | Getty Images
The median rent in Manhattan hit a new record in January as a strong job market and limited housing supply pushed up prices.
The median rental price rose 15% to $4,097 month-on-month, the highest in January, according to a report from Douglas Elliman And Miller Samuel. The median rent in Manhattan was $5,142, up 13% from January 2022.
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Analysts and real estate experts expected rents to start to fall in January after record surges at the end of last year. But despite the slowdown in the economy and high-profile layoffs in the financial and technology sectors, rental demand in Manhattan remains strong.
“We’re not seeing a significant drop in rents,” said Jonathan Miller, CEO of Miller Samuel, a real estate appraisal and research firm. “They really just move sideways.”
Analysts say the main driver behind Manhattan’s rental market is a strong job market. While layoffs at big tech companies and Wall Street banks have made headlines, the overall job market and wage growth in New York remain strong. As more workers return to the office, more employees may return to the city.
New leases in January were up 8% from December and up 9% from January 2022, showing that despite high prices, tenants are still willing to pay.
At the same time, the number of vacant apartments, although growing, remains low. The vacancy rate, or share of apartments available for rent, was 2.5% last month, Miller said, below the 3% rate more typical in Manhattan.
Joshua Young, executive vice president and managing director of sales and leasing at Brown Harris Stevens, said the power of leasing is “a tale of two cities.”
He said there is strong market demand for new, high-quality rental properties in prime locations, resulting in a limited supply of luxury apartments. At the same time, more and more potential apartment buyers prefer to rent housing, expecting lower selling prices.
“They sit and wait in rent until prices come down,” he said. “They don’t want to be the ones who buy and overpay for properties that will be worth less in six months.”
Demand for rentals is particularly high in the luxury real estate segment, as many potential luxury buyers are choosing to rent. Nearly one in five luxury property leases in January resulted in a bidding war, Miller said.
Analysts say rents are unlikely to fall much, if at all, in the coming months unless the economy and the labor market lose momentum.
“I believe 2023 will be as strong as 2022 when it comes to the rental market. [goes]”, Young said.