Manhattan apartment rents jumped to their highest level in two years during in the second quarter, according to a report released Thursday.
Monthly median face rent jumped 7.9% to $3,125 in the second quarter from the same period a year ago, according to a quarterly report by Prudential Douglas Elliman and Miller Samuel Inc. It was the fifth consecutive quarterly increase. Net-effective rents, which include concessions such as one month free, were essentially the same as face rents because landlords are largely discontinuing such concessions, according to Jonathan Miller, chief executive of Miller Samuel. A mere 3.7% of new rental transactions during the quarter included one month free rent, the report noted.
“The pace of the market is accelerating,” said Mr. Miller. “It is reasonable to expect to see more of the same over the next year.” He cites falling unemployment levels and difficulties in getting mortgages as factors bolstering the rental market.
Smaller apartments, studios and one-bedrooms, saw the highest annual increases in the second quarter. Median rent for a studio soared 15.4% to $2,395, while median rent for one-bedrooms rose 8.5% to $3,250, according to the report. Meanwhile, median rent for two-bedroom apartments rose 5% to $4,298. Those increases are the largest in more than four years, said Mr. Miller.
“This is evidence that we are seeing an improving economy,” he said, adding that when companies hire new employees, people move into entry-level rentals first.
A separate second-quarter report by Citi Habitats, whose numbers showed rents hitting all-time highs beginning in March, noted increases in average rent across all-sized apartments. During the quarter, average rent for studios increased $76 a month from the same time a year ago, to $2,052. Average monthly rent for one-bedroom apartments was $2,804, up $132 a month; two-bedrooms was $3,930, up $173 a month; and three-bedrooms was $5,230, up $245 a month, the report said.
“The second quarter was more of the same, slow and steady price appreciation,” said Gary Malin, president of Citi Habitats.
Meanwhile, new apartments hitting the market continue to be quickly snatched up. According to the Elliman/Miller report, apartments remained on the market for a slightly over a month, 38 days—near 17-year lows.
“There is little supply, and renters need to react,” said Mr. Malin. “If you see something you absolutely love, the best thing to do is put in an application, and if you regret it, the worst that can happen is you lose the application fee.”