A man enters a building with apartments for rent in New York City.
Eduardo Munoz Alvarez | View Press | Corbis News | Getty Images
Median rents in Manhattan hit a new record in January as prices rose on the back of a strong job market and a limited supply of apartments.
The average rental price rose 15% from a year ago to $4,097 – the highest in January, according to a report Douglas Elliman And Miller Samuel, In January 2022, the median rent in Manhattan was $5,142, up 13%.
Rents were expected by analysts and real estate experts start falling after january record boom at the end of last year. But despite a freezing economy and high-profile layoffs in finance and tech, Rent Seeking in Manhattan remains strong.
“We’re not seeing rents decline in any meaningful way,” said Jonathan Miller, CEO of Miller Samuel, a real estate appraisal and research company. “They’re really just moving sideways.”
Analysts say the main driver of Manhattan’s rental market is a strong job market. While layoffs at big tech companies and Wall Street banks grabbed headlines, the overall job market and wage growth in New York remain strong. As more workers return to the office, more workers may also move back to the city.
New leases rose 8% in January compared to December and 9% in January 2022, suggesting that despite prices being higher, renters are still willing to pay them.
At the same time, the inventory of available apartments remains short while growing. The vacancy rate — or the share of apartments available for rent — was 2.5% last month, down from the 3% rate more typical for Manhattan, Miller said.
Joshua Young, executive vice president and managing director of sales and leasing at Brown Harris Stevens, said the rental strength is “a tale of two cities.”
He said there is strong demand for new high-quality rentals coming to market in prime locations, leading to a limited supply of top apartments. At the same time, more and more potential apartment buyers are opting to rent while waiting for sale prices to fall.
“They’re sitting and waiting in fares until the prices come down,” he said. “They don’t want to be the one who buys and overpays for a property that will be worth less in six months.”
Rental demand is particularly high in luxury rentals, as many potential luxury buyers are opting to rent. Miller said there was a bidding war for about one in five of the luxury rentals in January.
Analysts say rents are unlikely to come down significantly in the coming months, unless the economy and job market pick up.
“I believe that 2023 will be as strong as 2022 as far as the rental market is concerned [goes]Young said.