A Chelsea Tower rental apartment billboard.
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The average monthly rent for Manhattan apartments exceeded $5,000 for the first time ever — and brokers say demand and prices are rising even higher in the fall.
According to a report by Miller Samuel and Douglas Elliman, the average apartment rent in June was $5,058, the highest on record. Average rental prices were up 29% over the previous year, while median rents rose 25% to $4,050 per month.
In addition to pricing multiple tenants, the hike could be impacted amid broader inflationary pressures. Rent is a major component of the government’s consumer price index, Which rose 9.1% in June from a year agoAnd New York is the largest rental market in the country.
Continued price pressure in Manhattan rentals could add to higher inflation in the coming months, and could put further pressure on the Federal Reserve to raise rates in an effort to lower prices.
“There are no signs of a slowdown, at least not yet,” said Jonathan Miller, CEO of Miller Samuel.
Miller said higher mortgage rates and fears of a housing recession are driving more potential buyers into the rental market.
Plus, the supply of Manhattan apartments available for rent, which ballooned during the pandemic, is now nearing record lows. The vacancy rate was only 1.9% at the end of June, with about 6,400 apartments available – 46% less than the previous year.
Brokers say many families and renters who left the city during the pandemic are now returning, despite concerns about high crime, taxes and troubled subways. Small tenants are also entering the rental market. Millennials and even some members of the Gen Z demographic are moving to the city after college or working away from high-rise rentals to take advantage of the city’s culture and nightlife.
“At the end of the day, they want to live in New York,” said Valirjana Gashi, a broker from Serhant. “Even some of the families that went to Miami are coming back.”
July and August are typically the biggest rental months in Manhattan as tenants look for early September start dates before returning to school and work. Brokers say that while open houses for sale listings are almost empty, open houses for rentals have never been more crowded.
“When a good rental comes on the market, especially downtown, there are lines down the block,” Gashi said.
The battle of bidding for rent has become routine now. Gashi said one of his clients is looking at a one-bedroom city that’s listed at $6,000 a month — up from $5,000 a month last year. The client is offering $6,750 to try to deter rival bidders.
He also has a client who plans to eventually buy in Manhattan, but is renting in the meantime, whose budget exceeds $30,000 a month.
“He is willing to spend on rentals because when the time is right to buy, he hopes to save even more on purchases,” she said. “They think the selling prices are going to come down.”