Manhattan apartment rents set another record in frenzied market
(Bloomberg) — Manhattan apartment rents hit a record high for the second month in a row as the city roars back from the depths of the pandemic.
Tenants paid an average of $3,644 on new leases signed in March, the highest in three decades of data-keeping by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. Rents increased 23% from a year ago and are $14 more than the previous record set in February.
Reflecting a competitive sales market, about a fifth of leases were signed at rates above their asking prices – an average of 9.7% higher. The numbers were similar for February, the first month firms track rental bidding wars.
Demand is intense as Covid-19 restrictions are lifted, more employers bring workers back to their offices and social life in the city bounces back. While some renters are moving to New York now, others who have taken advantage of the pandemic’s bargain now face the dilemma of renovating at significantly higher prices, or moving to keep their costs down.
Apartment-hunters are finding that incentives so common during the darkest months of the pandemic have become scarce and small. About 18% of new leases last month had a homeowner’s concession, such as a free month or payment of a broker’s fee, down from 34% a year earlier. The price of sweeteners came down from two months to 1.5 months in March 2021.
Helping to give landlords the upper hand is the vacancy rate, which remained below 2% for the fourth month in a row. According to firms, the vacancies were over 2% just before the pandemic, but increased to over 10% early last year.
Miller Samuel President Jonathan Miller said the market could be even tougher for renters who traditionally live up to their busiest months in July and August.
“We have a lot of development ahead of us, it is not yet at its peak,” he said. “Right now it’s going up into the spring and summer, and I’d suspect we’re going to continue to see unusual rent increases until then.”
On the bright side, inventory is rising, which could help calm competition. While listings are still down significantly from a year ago, there were 35% more apartments available for rent in March than in February, Corcoran Group said in its report.
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