Rents in Manhattan are once again hitting new record highs, after cratering during the pandemic.
The median monthly rent for a Manhattan apartment was a record $3,700 in February. That was up 24% from a year ago and up an unusually large 4.2% from January, according to a report from brokerage Douglas Elliman and appraisal firm Miller Samuel.
“What we’re seeing is a rapid rebound and an unprecedented climb in rental prices,” said Jonathan Miller, president and CEO of Miller Samuel. “In all categories, everything is going up.”
Rise in bidding wars
Demand is surging for rental apartments, which means the “pandemic pricing” deals offered just a year or two ago have now been replaced by bidding wars.
The net-effective median rent, or the amount tenants pay after factoring in incentives from landlords, spiked by a record 28% from last year to $3,630 a month as these incentives dried up. New leases with concessions, like one or two months of rent knocked off a yearlong lease, dropped from 41% a year ago to just 20% in February.
The last time the net-effective rent was that high was in April 2020, at $3,540 a month, after the pandemic’s onset but before the bottom fell out of the rental market. But the amount tenants paid in February was 7.1% higher than pre-pandemic rent in February 2020.
Prices are rising across the board as many New York City businesses return to in-person work, boosting demand.
A year ago, roughly 1% of new apartments leased at a rent higher than listed because of a bidding war, said Miller, which is close to a typical rate. But, in February, 18% of Manhattan apartments rented for more than the asking price.
Short supply of apartments to rent
The inventory of rental apartments, which glutted the borough during the pandemic, dropped 81% in February from the year before. The vacancy rate, which was above 11% a year ago, dropped to just 1.32%.
“It isn’t an all-time record low in vacancy, but it is the lowest February since the financial crisis,” said Miller.
February is typically one of the softest months for rentals, said Hal D. Gavzie, executive manager of leasing at Douglas Elliman. “And there was no inventory. We’re hoping there is some inventory opening up.”
Gavzie said many renters are facing a dilemma: accept a rent increase or find a new apartment.
“Renters knew going into this that their concessions would end,” said Gavzie. “You knew you’d be able to take advantage of the deep discounts – in some cases discounts of 40%, 50% and lock in for a year or two. If that lease is coming up soon, the landlord may be offering the renewals at a 15% to 40% increase.”
Gavzie’s agents work with landlords that have large real estate portfolios and are reporting that renters are generally just sucking up the higher rents.
“Overall, we’ve seen these tenants accepting the renewal,” he said. “The reason being: Where else are they going? Rents are going back to pre-covid levels and higher.”