Manhattan apartment rents increased 9 percent in July from a year earlier as landlords tested how high they could push prices amid few vacancies.
The average apartment in the borough commanded $3,358 in July, up from $3,084 a year earlier and 1 percent below the market peak in May 2007, according to a report today by broker Citi Habitats. Rents averaged $3,754 for two-bedroom units and $5,052 for three-bedroom apartments, both up 9 percent.
“Owners are smart, savvy individuals who are going to keep pushing their rents and pushing their rents until such time when the tenant population speaks back,” Gary Malin, president of Citi Habitats, said in a telephone interview.
A stagnant sales market is leading to a tighter rental supply and greater competition for apartments, encouraging landlords to raise rents in the busiest leasing season. Sales of Manhattan co-ops and condos declined 3.8 percent in the second quarter from a year earlier, appraiser Miller Samuel Inc. and broker Prudential Douglas Elliman Real Estate said on July 1.
Compared with the previous month, July rents slipped 1 percent for apartments of all sizes except three-bedrooms, Citi Habitats said. Rents for those units rose 1 percent.
Manhattan’s apartment vacancy rate was 0.9 percent, little changed from a year earlier and up from 0.7 percent in June.
“The prices are so high right now, there comes a point at which the pain threshold for tenants hits that point of ‘This is very expensive,’” Malin said. “It just gets to that level at which tenants can’t pay it anymore.”
Landlords cut back on concessions, offering deal sweeteners such as a month’s free rent in only 7 percent of new leases in July, Citi Habitats said. A year earlier, they offered incentives for 25 percent of new rental transactions.
“We’ll see what happens over the month of August,” Malin said. “Up until the last few days, people were feeling better about the overall economy.”
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