After four consecutive months of modest rental growth, Manhattan rents are accelerating again, according to a monthly rental market report released today by Douglas Elliman. The average monthly rent for a Manhattan apartment in February was $3,956 — a 4.3 percent increase from January and a 4.9 percent year-over-year increase, the report shows.
Average rents in the past four consecutive months combined grew slightly at an average of 1.6 percent year-over-year. However, the median rent for a Manhattan apartment in February was $3,190 per month, a 4.7 percent increase over the same period in 2012. The rental spike follows a rapid 12-month balloon in rentals last year.
“It’s somewhat surprising to see that large of an increase in the sense that we had four consecutive months of very modest growth and rents are at or near record levels,” said Jonathan Miller, president of appraisal firm Miller Samuel, who compiled the report. “One month doesn’t make a trend, but we’re going to bump along at a high level for the near future.”
Rising employment, tight credit and low mortgage rates continue to drive increasing rents in both Manhattan and Brooklyn, Miller said.
At the same time, the number of new rental transactions in Manhattan decreased for the first time since July, Elliman’s report notes. Only 3,097 transactions took place in February, a dramatic 34.5 percent decrease from January and an 8.8 percent decrease over the previous year.
Meanwhile, 8 percent of rental transactions were completed with some sort of concession—a stark drop from the months during the recession when many landlords offered tenants free rent and other sweeteners, but a slight increase from the 5 percent seen in January, according to Citi Habitats’ Manhattan rental report for February.
“Ultimately, [landlords] love to keep their price points, so they just offer concessions to spur activity,” Gary Malin, president of Citi Habitats, told TRD.
He attributed the increase in rents to a lack of inventory and new construction in the sales market.
“It’s a strong, healthy marketplace,” he said. “Prices rose but they’re still steady year-over-year.”
The vacancy rate in Manhattan remained roughly the same, nudging up to 1.4 percent in February from 1.37 percent in January, Citi Habitats’ report notes.
Meanwhile, in Brooklyn, the rental market resumed “robust price growth” in February, Elliman’s report said. The average rent for a Brooklyn apartment was $3,096 per month, an impressive 15.4 percent year-over-year increase and a 4.7 percent increase from January.
“The gains have been more erratic” in Brooklyn, Miller said, adding that he was “skeptical that we’ll see that growth sustained. At some point it will begin to level off a bit.”
There were also 280 new Brooklyn rental transactions in February — 17.6 percent more than were on the market during the same month last year, Elliman’s report says.