Manhattan rents hit record high in January

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Average rents in Manhattan hit a record in January

Average rents in Manhattan hit a new record in January as a strong job market and limited housing supply pushed prices higher.

The median rental price rose 15% from the same month last year to $4,097 — the highest ever in January, according to a report by Douglas Elliman and Miller Samuel. The median rent in Manhattan was $5,142, a 13% increase from January 2022.

Analysts and real estate pundits had expected rents to start falling in January after record jumps late last year. But despite a cooling economy and high-profile layoffs in finance and tech, Manhattan rental demand remains strong.

“We’re not seeing a significant drop in rents,” said Jonathan Miller, CEO of Miller Samuel, a property valuation and research firm. “They really only move 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 have grabbed the headlines, the broader 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 rentals were up 8% in January from December and 9% from January 2022, suggesting that while prices are high, renters are still willing to pay them.

At the same time, the stock of available apartments is increasing, but low. The vacancy rate — or the proportion of apartments available for rent — was 2.5% last month, below the 3% rate more typical of Manhattan, Miller said.

Joshua Young, executive vice president and managing director of sales and leasing at Brown Harris Stevens, said rental strength is “a tale of two cities.”

He said there is strong demand for new high-quality rental apartments coming onto the market in prime locations, resulting in a limited supply of top apartments. At the same time, more and more potential homebuyers are choosing to rent while waiting for sales prices to fall.

“They sit and wait in rented apartments until prices come down,” he said. “You don’t want to be the one who buys and overpays for a property that’s going to be worth less in six months.”

Rental demand is particularly high for luxury rental properties as many of the potential luxury buyers choose to rent. Almost one in five luxury rentals in January resulted in a bidding war, Miller said.

Analysts say rents are unlikely to fall much, if at all, in the coming months unless the economy and jobs slow down.

“I believe that 2023 will be as strong as 2022 in terms of the rental market [goes]’ said Young.