January saw an all-time high for Manhattan rents. As a result of a robust job market and a shortage of available apartments, Manhattan’s median rents increased in January, setting a new record. According to a report from Douglas Elliman and Miller Samuel, the median rental price in January increased 15% to $4,097 from the year prior. This was the highest monthly figure ever. In Manhattan, the median monthly rent increased by 13% to $5,142 in January 2022. Following record increases in late last year, analysts and real estate specialists had predicted that rents would begin to decline in January. But despite a slowing economy and well-publicized layoffs in finance and technology, Manhattan’s rental market is still in high demand. According to Jonathan Miller, CEO of Miller Samuel, a real estate appraisal and research firm, “We’re not seeing rents fall in any appreciable way.” In reality, they are merely moving sideways. According to analysts, a healthy job market is what primarily drives Manhattan’s rental market. Despite headline-grabbing layoffs at major tech firms and Wall Street banks, New York’s overall job market and wage growth are still strong. More employees might be returning to the city as more people go back to work. New leases increased 9% in January 2022 compared to January 2022 and by 8% over December, indicating that despite high rents, tenants are still willing to pay them. At the same time, despite growth, there are not a lot of apartments available. According to Miller, the vacancy rate, or percentage of apartments available for rent, was 2.5% last month, which is lower than the 3% rate that is more typical for Manhattan.
The rental strength is “a tale of two cities,” according to Joshua Young, executive vice president and managing director of sales and leasing at Brown Harris Stevens. According to him, there is a high demand for brand-new, top-notch rentals that are entering the market in desirable areas, which is resulting in a shortage of luxury apartments. While they wait for the price of apartments to drop, an increasing number of prospective apartment buyers are choosing to rent. They are waiting for rental prices to decrease, he said. They don’t want to be the ones who pay too much for a house that will be worth less in a year. Since many prospective buyers of luxury properties opt to rent, there is a particularly high demand for rentals in this category. According to Miller, there were bidding wars over nearly one in five luxury rentals in January. Analysts predict that rents won’t decrease much, if at all, in the upcoming months unless the job market and economy slow down. In terms of the rental market, “I think 2023 will be just as strong as 2022,” Young said.
Source: CNBC
