The average monthly rent for an apartment in Manhattan surpassed $5,000 for the first time – and realtors say demand and prices will continue to rise 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 rates increased 29% year over year, while median rent rose 25% to $4,050 per month.
Aside from discounting many tenants, the increases could have knock-on effects given broader inflationary pressures. Rents are a key component of the government’s CPI, which rose 9.1% year-on-year in June, and New York is the country’s largest rental market.
Continued price pressure on Manhattan rentals could contribute to higher inflation in the coming months and put more pressure on the Federal Reserve to raise interest rates to tame prices.
“There’s no sign of slowing down, at least not yet,” said Miller Samuel CEO Jonathan Miller.
A billboard for rental apartments in the Chelsea Tower.
Jeff Greenberg | Getty Images
Miller said higher mortgage rates and fears of a housing downturn are driving more potential buyers into the rental market.
At the same time, Manhattan housing supply, which has skyrocketed during the pandemic, is now near record lows. The vacancy rate at the end of June was only 1.9% with around 6,400 apartments available – 46% less than in the previous year.
Realtors say many families and renters who left the city during the pandemic are now returning, despite concerns about high crime, taxes and troubled subways. Younger tenants are also pouring into the rental market. Millennials and even some members of Generation Z come to the city after college or work away from high-rise rentals to take advantage of the city’s culture and nightlife.
“At the end of the day, they want to be in New York,” said Valirjana Gashi, a broker at Serhant. “Even some of the families that went to Miami are coming back.”
July and August are typically the busiest rental months in Manhattan, as renters look for September start dates before returning to school and work. Realtors say that while open houses for sale are nearly empty, open houses for rental have never been this crowded.
“When a good rental apartment comes along, especially downtown, there are lines around the block,” Gashi said.
Bidding wars are now routine for rentals. Gashi said one of her clients is looking at a one-bedroom downtown apartment listed for $6,000 a month — up from $5,000 a month last year. Client offers $6,750 to try and fend off competing bidders.
She also has a client who plans to eventually buy in Manhattan but is now renting on a budget of over $30,000 a month.
“He’s willing to spend money on rent because when the time is right to buy, he hopes to save even more on the purchase,” she said. “He believes that sales prices will soon drop sharply.”