Manhattan rents were the highest ever for December
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New York’s Upper East Side neighbourhood is home to apartment buildings.
Victor J. Bloomberg | Bloomberg | Getty Images
Manhattan rents hit their highest point ever in December, as apartment supplies plummeted. Landlords began demanding increases of double-digit percentages.
The average apartment rent in Manhattan hit $4,440 in December, while the more widely watched net effective median rent (median rent including all discounts) hit $3,392 — the highest level for December on record — according to a report from Douglas Elliman and Miller Samuel. This year, the net effective median rent increased 21%.
This surge represents a significant turnaround from last year, when Manhattan had more than 250,000 vacant apartments and no brokers were optimistic about a long recovery. Rents have risen to levels that are higher than they were before the pandemic and tenants are now in shock at their expected rent hikes for 2011.
The geyser is a source of great demand
Janna Raskopf is a top Manhattan rental agent with Douglas Elliman. “What began as a trickle last year has turned into a geyser-of demand,” she said. “I have been doing this 14 years, and it is absolutely extraordinary.”
Raskopf and other agents say that the demand for Manhattan apartments is driven in large part by young people who are looking to get new jobs. Last spring saw many return to the city after Mayor Bill de Blasio announced the city’s reopening on July 1. According to brokers, even though less than a third are now back in Manhattan at work, it continues to attract large numbers of people.
New Yorkers are now renting while they wait to be able to stay in New York City. Raskopf explained that even wealthy people sometimes rent instead of buying in Manhattan. They are waiting to see what happens post-pandemic, while they wait for the future economic and cultural development.
The sudden shortage of supply has resulted from all the demand. A year ago, the vacancy rate — normally around 2% for Manhattan — was 11%. The report shows that inventory fell 81% in December 2021, compared to December 2020.
The vacancy rate now stands at 1.7%. There are only 4,700 apartment available. Due to the shortage of rentals apartments, overall leasing activity has fallen 40% since December last year.
Bidding wars, double-digit rent hikes
Raskopf stated that she just listed a 2-bedroom apartment for $12,000 per month. Raskopf had 26 people visit the apartment immediately and there was a bidding battle among renters. She said it will likely rent for 15% above the asking price — like many apartments she’s listing lately.
She said, “Forget about Covid discount,” The listing price is often just a starting point. People will be able to go higher to obtain it. My fourth quarter listing sales were over 50% for asks or higher.
Rent increases are being made to existing tenants as well. According to brokers, renters who secured good lease deals in 2020 or early 2021 will be seeing their leases due. Landlords see that they can increase rents by 20% to 30% or more based on the market — and are eager to make back their lower incomes or losses during the pandemic.
Downtown has seen the most significant rent increases, with an average rent increase of 28% to $4,100. With studio rents increasing by 21%, one-bedroom and studio apartments saw the largest increases.
Although landlords try to negotiate with tenants to reduce the rent increases, new renters are quickly being priced out of markets they can afford. Rising rents threaten early hopes of Manhattan being more accessible to first-time renters.
“The landlords want to make compromises,” she stated. She said, “But they were required to pay their taxes and expenses throughout the pandemic. Now they can get it back.” Some tenants just say they can’t afford to pay 20% more and then leave.
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