Manhattan apartment rents jumped in March at the fastest pace in six months, sending rates to within about 2 percent of their peak, as limited inventory in the sales market fueled competition among tenants.
The median monthly rent climbed 6.7 percent from a year earlier to $3,195, according to a report today by appraiser Miller Samuel Inc. and brokerage Douglas Elliman Real Estate. The increase was the biggest since September. The number of new leases signed surged 10 percent from March 2012 to 3,697.
Rent gains have accelerated since the start of the year as tenants aspiring to own property are thwarted by the lack of homes on the market, said Jonathan Miller, president of New York-based Miller Samuel. The number of apartments for sale in Manhattan tumbled 34 percent in the first quarter, the most in more than 12 years of record keeping, according to the appraisal firm and Douglas Elliman. A similar trend helped boost rents by 11 percent last month in the Brooklyn borough, where the supply of homes for sale also plunged.
“If you can’t find something to transition from rent to buy, you continue to rent,” Miller said.
The vacancy rate for Manhattan apartments fell to a two-year low of 1.46 percent in March, down from 1.69 percent the previous month and 1.89 percent a year earlier.
Monthly rents in Manhattan are on course to surpass the 2006 peak of $3,265 this year, aided by growth in the job market, Miller said. New York City added 48,300 jobs in the 12 months through February, according to the state Labor Department.
Mary Smith is among those who took a new job in Manhattan this year, moving north from Atlanta to work in the wealth-management division of an investment bank.
Though Smith, 24, knew she couldn’t replicate her previous $1,100-a-month two-bedroom with a fireplace and balcony, she had some firm requirements for her Manhattan home: it had to have a washer and dryer in the unit and she wanted a building with a gym, ideally, downtown. Her budget was about $3,000 a month.
“It ended up creeping up a little bit,” she said of her price range. “I was looking for so many things but on a smaller budget.”
Working with John Farrell, a Citi Habitats broker, Smith looked at about 12 apartments, some of which had already been leased within hours of her arrival. She finally found what she was looking for in a 495-square-foot (46-square-meter) studio in Equity Residential’s Beatrice tower, a luxury rental atop the Eventi hotel on 29th Street and Sixth Avenue. Apartments at the Beatrice, completed in 2010, begin on the 26th floor and offer amenities such as a 24-hour doorman, fitness center, valet dry cleaning and a billiards room, according to the website.
On the advice of her broker, she “moved immediately,” Smith said. “An hour and a half after seeing it, we had the paperwork signed and a security deposit. Within two days I had the keys.”
Apartments at doorman buildings, like the Beatrice, rented for a median of $3,610 last month, up 7.8 percent from a year earlier, Miller Samuel and Douglas Elliman said in their report. Luxury rentals, the top 10 percent of all new leases by price, climbed 1.3 percent to $8,101 a month.
In Brooklyn, the median monthly rent climbed to $2,560 in March, Miller Samuel and Douglas Elliman said in their report. The number of new signings fell 2.5 percent from a year earlier to 311 as tenants stayed put and renewed their leases in the face of limited supply.
“It’s mirroring Manhattan’s growth,” Miller said. “Brooklyn has morphed into a much more standalone significant location. It is no longer the close second, it’s a real peer of Manhattan and it offers a competitive pricing advantage.”
The median price of of Brooklyn co-ops, condos and one-to-three family homes jumped 14 percent in the first quarter from a year earlier, to $515,000, the highest since 2008, before Lehman Brothers Holdings Inc. filed for bankruptcy, ushering in a slump in real estate prices, according to a separate report today from Miller Samuel and Douglas Elliman. The supply of available homes for sale slid 45 percent to the lowest level in five years of records.
In Manhattan, rents in the Soho and Tribeca districts were among the city’s highest in the first quarter, with studios leasing for a monthly average of $2,483, one-bedrooms for $3,894 and two-bedrooms for $5,815, according to Citi Habitats, which also released a report on the rental market today.
Manhattan rents are expected to climb in the next two quarters, as the months from May through September represent the busiest leasing season, Gary Malin, president of Citi Habitats, said in an interview.
“Tenants who transacted in the first quarter of this year will likely have fared better than those who will transact in the second quarter in terms of value,” he said. “It will likely tighten up, meaning the prices will increase.”