Manhattan’s apartment market is heating up in the busiest season for moving, sending rents to a five-year high and shifting the advantage back to landlords after a brief respite for tenants.
The median monthly rent rose 3.1 percent in May from a year earlier to $3,300, the highest since February 2009, according to a report today by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The vacancy rate slipped to 1.58 percent from 1.60 percent.
Rents are rebounding after a six-month slide that started in September, when a surge in home sales helped push up apartment vacancies. Rigid mortgage standards and higher prices are tipping would-be buyers into the rental market, while employment growth is increasing the pool of potential tenants, said Jonathan Miller, president of New York-based Miller Samuel.
“Weakness in the rental market was short lived,” Miller said in an interview. “This pent-up demand from purchasers has been worked off and more people are getting hired. Rents tend to react more to rising employment than purchases.”
New York City added 75,000 jobs in the 12 months through April, according to the state Labor Department. The unemployment rate was 7.9 percent, down from 8.8 percent in April 2013.
The months from May to September are typically the busiest time for rentals as college students graduate and get jobs and families settle down before the next school year starts.
After referring in March to the New York market as “being on the pause button,” David Santee, chief operating officer of Equity Residential (EQR), said last week that the city is “gaining momentum.” His Chicago-based company is the country’s largest publicly traded apartment landlord.
At Equity Residential’s 30 New York properties, rents are up 4 percent from last year and apartments are almost 97 percent occupied, Santee said at a conference in New York sponsored by the National Association of Real Estate Investment Trusts.
Homebuyers last year rushed to complete deals as a spike in mortgage rates from near-record lows in May threatened to make homes more expensive. In the fourth quarter, Manhattan condominium and co-op sales reached the highest total for the period in 25 years of record-keeping, according to Miller. That meant landlords were facing higher vacancy rates and offering concessions, such as a free month’s rent, to fill apartments.
Last month, 7 percent of new leases included incentives to entice tenants, down from 9 percent in April and the lowest level since October, according to Citi Habitats, which also released a report on the Manhattan rental market today. Those offers will continue to dissipate, said Gary Malin, president of the brokerage.
“Negotiability isn’t as high as it was,” Malin said. “This is busiest time of year and there’s limited inventory. Tenants need to act quickly. An hour or two-hour delay could mean you lose the apartment.”
Joelle Getrajdman said she and her boyfriend lost one Upper East Side unit to a competing offer from a tenant already living in the building. The couple struggled to find other one-bedroom apartments in the neighborhood within their monthly budget, which was no more than $2,500.
Morgan Turkewitz, a broker at Citi Habitats, directed Getrajdman to a third-floor unit on 88th Street that was still under construction. It was one of a few apartments being remodeled in the six-story building.
“We had to be a little creative,” Turkewitz said. “This one building had apartments that were not yet listed, so we rushed over there and then immediately wound up applying.”
It didn’t matter to Getrajdman, 27, that the stove and sink weren’t yet installed or that the floors weren’t finished.
“An hour and a half after I saw the apartment, I was in Midtown signing the lease and putting down a deposit,” said Getrajdman, who graduated last month from Rutgers University’s Robert Wood Johnson Medical School in New Brunswick, New Jersey, and moved to New York for her residency in surgery.
More renters who already live in Manhattan are staying put. The number of new leases in May fell almost 23 percent from a year earlier, suggesting tenants remained in their apartments as better deals elsewhere got harder to find, Miller said.
In Brooklyn, New York’s most populous borough, new leases tumbled 53 percent, according to Miller Samuel and Douglas Elliman. Rents jumped 8.6 percent from May 2013, bringing the monthly median to $2,800, or $500 less than in Manhattan.
“We were wondering at one point if Brooklyn would be as expensive as Manhattan, but the gap has widened,” said Luciane Serifovic, executive vice president and director of rentals at Douglas Elliman.
In February, the median rent in Brooklyn was just $210 less than in Manhattan, the smallest difference since Miller Samuel and Douglas Elliman began tracking the market in 2008.
Luxury apartments in Manhattan, the top 10 percent of leases by price, cost a median of $7,950 a month in May, down 2.7 percent from a year earlier. The number of new rental agreements in the category dropped 23 percent.
Among Manhattan neighborhoods, leasing costs last month were highest in Soho and Tribeca, ranging from an average of $2,610 a month for studios to $7,961 for three-bedroom units, according to Citi Habitats.
On the Upper East Side, studios leased for $1,885 on average, while three-bedroom apartments commanded $5,469, the brokerage said.
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